Lending Club is in hot water after a scandal involving $22 million worth of loans. The CEO and founder of the peer-to-peer lending platform Lending Club just stepped down after one of the company's investors found that the loans broke the company's own rules, according to Bloomberg News.

In short, Lending Club sold too many loans to just one big investor, which goes against the company's "peer-to-peer" philosophy.

But that's nothing new. The entire industry is having an identity crisis, deciding whether to be a channel for hedge funds and Wall Street banks to lend to Joe Sixpack, or whether to stick to its roots as a platform to connect small investors to small borrowers shut out from other loan options.

Lending Club may have got its start as a peer-to-peer lender, connecting small borrowers with small lenders, but now its main investors are big Wall Street banks and hedge funds.

What does the Lending Club scandal mean for borrowers? Well, it could mean less money on the table for loans to consolidate and pay off debt, for one. Lending Club's main borrowers are mostly ordinary consumers looking to consolidate their credit card debt.

Lending Club's troubles could signal some rough waters ahead for other peer-to-peer lending platforms. Other online lending platforms like SoFi, Prosper and OnDeck could face increased scrutiny from regulators and investors. Lending Club is the top dog of peer-to-peer lenders, so if it's having problems, investors and regulators will probably guess that others are in the same boat, says MarketWatch.

The ripple effect of the Lending Club scandal might mean that paying off credit card debt, student loans, or getting a loan from a peer-to-peer lender to start a new business could get tougher this year.

Peer-to-peer lenders have had a pretty good run for the last few years, so a minor speedbump is probably overdue. Investors are taking a hard look at peer-to-peer lenders' books, and sometimes even suing.

In April, some of Lending Club's investors filed a class-action lawsuit against the company, alleging that it broke state usury laws.

But peer-to-peer lenders aren't the only ones tightening their belts. Money's getting tight all over. Angel investors and venture capitalists, who invest in the next generation of Ubers, Airbnbs, FitBits and GoPros, have pulled back sharply this year.

2015 was one of the biggest and best years for venture capital in history, and we have a whole bunch of new companies, apps and gadgets thanks to it. 2016 looks like the start of some lean times for startups, with more competition over less money.

The tightening of capital markets has not affected mortgages or car loans yet, which are still at historic loans. If you're considering buying a home or a car, now is a good time. If you're thinking about taking out a loan with Lending Club or another peer-to-peer lender, you might want to hold off until all the legal and regulatory dust settles.



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