Is LendingClub Ruining Fintech's Future?

Peer to peer lending was supposed to be a major theme in how individuals borrow money while also presenting a compelling investment case to investors.However, the recent woes at LendingClub Corp (NYSE: LC) may have ultimately killed the relatively new segment's future following the sudden resignation of its CEO and subsequent subpoena from the Department of Justice.According to Bloomberg, the U.S. Treasury is now exploring venues it could take to enforce stricter scrutiny of fintech firms. The timing is poor as internet-based lending has surged to more than $20 billion last year from nearly nothing a decade ago. The figure is expected to balloon to $120 billion by the end of the decade - that is if the industry isn't plagued by unfavorable regulations."The industry has to shift from playing offense to defense right now in Washington," Isaac Boltansky, an analyst at Compass Point Research & Trading told Bloomberg. "They're drawing the wrong kind of attention and it plays into the burgeoning fears in D.C. that this model is untested and therefore warrants additional scrutiny."Needless to say, internet lending has come with higher interest rates compared to traditional banks which concerns lawmakers. The question is can lawmakers find the right balance between encouraging a fast growing industry without dragging it down through over-regulation?