Post LendingClub, Other Online Lenders Under NY Regulatory Radar

The New York state's financial regulator, which recently launched a probe into LendingClub Corp

, is eyeing activities of other online lenders and whether they should be allowed to conduct business in New York, Reuters reported citing a person familiar with the matter. http://www.reuters.com/article/us-lending-new-york-probe-exclusive-idUSKCN0YG31O The Reuters report assumes significance for online lenders such as On Deck Capital Inc

and Prosper, the second-largest marketplace lender. According to the report, although the New York Department of Financial Services (NYDFS) has not yet established which companies it may target, the information it receives in response to a May 17 subpoena sent to LendingClub could shed light on broader industry practices that require scrutiny. http://www.benzinga.com/news/16/05/8002233/lendingclub-ticks-lower-amid-report-ny-regulator-has-subpoened-co-over-business-p Last week, NYDFS subpoenaed San-Francisco based LendingClub seeking information about loans it issued to New Yorkers since May 17, 2013. Information demanded by the regulator includes interest rates of LendingClub, underwriting standards and borrower verification. LendingClub has until June 21 to respond. "U.S. regulators have taken baby steps so far to regulate the sector with the Treasury this month calling for greater scrutiny," the report said. The NYDFS can determine whether a lender's interest rate practices comply with the state's usury laws, which cap interest rates at 16 percent. LendingClub charges interest rates as low as 5 percent and as high as 29 percent, according to the company's data. Reuters said a detailed probe on the industry by NYDFS could result in licensing requirements for online lenders in the state along with additional oversight of business practices and loan terms. Shares of LendingClub closed Wednesday's regular trading session at $4.44 and On Deck Capital closed at $4.93.