Discover Financial Services COO: There's 'Froth' Around Peer-To-Peer Lenders, But Feel Good About Our Ability To Compete

Discover Financial Services DFS COO and President Roger Hochschild, was on CNBC Wednesday to talk about the current trend in consumer spending, competition from peer-to-peer lenders and the rising default rate in student loans.

Consumer Is Saving, Paying Debt, Not Spending Much

“I think consumer spending overall is a bit softer than we would have liked to see or than most people expected last fall,” Hochschild began. “I think there was also a hope that with the savings from gas that would translate into more retail sales. I think the consumer is saving a little bit, using some of it to pay down debt, but again a bit soft on sales.”

‘Froth Around Peer-To-Peer Lenders’

Hochschild was asked if the company has any plans to partner with a peer-to-peer lender to grow its personal loan business. He replied, “We have been in the personal loan business for quite a while now, have seen good growth. There’s certainly a lot more competition now and I will say froth around the peer-to-peer lenders, but we have got a very disciplined underwriting approach, we bring it on to our balance sheets, we don’t charge upfront fee like most of them do. So, we feel good about our ability to compete.”

No Problems In Student Loan Repayment

On the growing default rate in student loans, Hochschild said, “Most students are very responsible. An investment in education is something worth borrowing for. Roughly 90 percent of our loans are co-signed by the parents as well and we see very strong performance in terms of students paying us back.”