FDIC Issues Guidance on Marketplace Lenders

February 1, 2016

In its winter 2015 Supervisory Highlights, released Monday, February 1, 2016, the FDIC issued guidance for its supervised banks doing business with marketplace lenders.  The agency advised, “before participating in marketplace lending, financial institution management should identify potential vulnerabilities and implement an effective risk-management strategy that protects the bank from undue risk.”

 

This guidance elaborates on the FDIC’s November 6, 2015 letter advising supervised institutions about strong underwriting standards and vendor management when doing business with marketplace lenders.  Specifically, the letter noted

  • “The importance of underwriting and administering loan purchases and participations in the same diligent manner as if they were being directly originated by the purchasing institution;” and 
  • “Third-party arrangements to facilitate the purchase of loans and participations should be managed by an effective third-party risk management process.”