U.S. Congressional panel examines refi loan to San Bernardino shooter

by 10 Dec 2015
A U.S. congressional panel is considering whether online lending platforms need more oversight after a perpetrator of last week’s shooting massacre in San Bernardino, California, used one of the websites to obtain cash days before the rampage.

The House Financial Services Committee is examining the loan and has sent questions to the Treasury Department, which deals with the financial industry’s reports on suspicious transactions, according to the panel’s communications director, David Popp. Syed Rizwan Farook, a U.S. citizen who worked for the government, had obtained the loan through Prosper Marketplace Inc. a few weeks before authorities say he and his wife carried out the Dec. 2 attack, a person with knowledge of the matter said Tuesday.

While there’s no indication Prosper did anything wrong, some analysts have speculated the loan may still prompt more rules for the rapidly growing business of Internet lending, potentially adding costs and eroding profits. Prosper is one of the oldest and largest companies in that industry, which seeks to bypass traditional banks by helping borrowers find investors willing to fund them. The loans have gained popularity among consumers by simplifying lending, often at lower interest rates.

The shooting rampage that killed 14 people in California is being investigated by U.S. authorities as an act of terrorism inspired by Islamic State, though not directed by the group. FBI Director James Comey told the Senate Judiciary Committee this week that agents haven’t uncovered direct ties between the couple and any terror groups, as he testified about the difficulty of detecting home-grown extremists.

The Wall Street Journal reported the House committee’s review late Wednesday. A spokeswoman for San Francisco-based Prosper declined to comment.

Unfortunate Coincidence

Farook had been employed by San Bernardino County for five years, most recently as an environmental specialist, and also held an account at a bank when he sought the loan from Prosper, which screens borrowers and verifies key information while arranging funding. His application for more than $28,000 was clean, and he said he would use the money to consolidate debt, a person familiar with the transaction said Tuesday, asking not to be identified because it was confidential. Refinancing is one of the most-common stated uses for loans arranged through the service.

Farook wasn’t on federal lists that lenders use to check borrowers for ties to terrorism, according to Scott Sanborn, chief operating officer at LendingClub Corp., one of Prosper’s main competitors.

“The fact that this happened is a tragedy,” he said in an interview this week. “But the fact that it may have come from a marketplace lender is an unfortunate coincidence.”

Bloomberg News
Cheyenne Hopkins and Noah Buhayar


Should CFPB have more supervision over credit agencies?