Former FDIC Head Joins Board of Online Lending Group
In a move that may prove to be quite surprising to some financial analysts and experts, Sheila Bair – formerly the head of the United States Federal Deposit Insurance Corp. – is taking on a new role. Bair is set to join on as a member of the board or an online lending group called Avant. All of this comes at the same time that the CFPB and others in the government are making serious efforts to regulate the world of online lending. Of course, with online loans quickly becoming more and more popular in recent years, it is somewhat easy to understand why certain government watchdog groups are interested in creating new, more stringent regulations. After all, that seems to be one of the only things our government consistently does.
Avant was founded by a former payday lender; one who made millions in this industry. And the company is growing rapidly. It just launched about three years ago and has already originated upwards of $3 billion in loans. Most of these loans were given to American consumers who did not exactly have spotless credit histories, either.
In a recent interview Bair said, “I really want there to be more innovation and competition serving this segment… it’s underserved.”
Online lending has been taking off like crazy in recent years. This industry is growing rapidly due to a number of startup companies that are working to make online lending a better experience for both individuals and small businesses. All of this growth, related to money as it has been, has certainly drawn the attention of financial regulators, like the Treasury Department and Consumer Financial Protection Bureau. Just recently, the U.S. Comptroller Thomas Curry stated that his group is on a mission to create a framework that will regulate what is often referred to as the “fintech” industry. This industry includes a wide range of services, like online loans and mobile payment processors.
As regulators and watchdog groups continue to scrutinize the industry, new lending company startups have been doing what they can to land former regulators and to bring them on board. Prosper Marketplace Inc. now includes Raj Date as a board member. Date was previously the deputy director of the Consumer Financial Protection Bureau (CFPB.) LendingClub Corp recently pulled in former Treasury Secretary Lawrence Summers.
Bair was the leader of the FDIC from 2006 until 2011. She often had clashes with leaders of the Treasury. These clashes were often related to how the government dealt with large banks during the last financial crisis. She fought hard for new rules that would make lenders add capital and to cut back on risky behavior. Some of the changes Bair championed wound up being included in the Dodd-Frank legislation and has led to stricter financial regulation in the United States.
Back in 2015 Bair became a board member for the largest lender in Spain, Banco Santander SA. She winded up parting ways with this lender after just a year and accepted a position as the president of Washington College, near Baltimore.
According to Avant CEO and co-founder Al Goldstein, “Sheila’s proven track record and expertise in the financial services and regulatory spaces will be invaluable to the Avant team.” Goldstein has stated that he would like Avant to ultimately turn into “the Amazon of financial services.” The company was valued by investors at about $2 billion when funds were raised for it back in 2015. The company puts a heavy focus on providing installment loans to consumers, with the average loan amount being about $8,000.