As reported earlier on Pitchbook, regulators are venturing into fintech targeting online lending platforms. Numerous lending platforms evolved post financial crisis in order to extend credit to millions of Americans that normal banks couldn’t extend credit to, or just flat out wouldn’t extend credit to.
As is natural with internet companies, though, the methodologies employed evolved leaving banks antiquated; they can’t (and couldn’t, and won’t be able to) compete given their cost to issue the dollar.
What’s one to do when you can’t compete?
Regulate out of existence.
If there’s anything big banks have, it’s relationships with politicians (Zero Hedge has a long and storied history of reporting any number and nature of those relationships).
It’s also interesting that given there’s already regulations in place (see, for instance, the Truth in Lending Act) we need a whole new set of regulations to protect the people that are already protected under the old regulations.
No doubt, the new regulations will be structured to allow now-existing banks to enter the market at the peril of the innovators and small businesses, while those seeking small business loans, mortgages, and various other lines of credit &v equity continue to suffer.
[Fundist Small Business Loans]
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