12/11/15, "Citigroup Funded Loan to Syed Farook Made Through Prosper Marketplace," Wall St. Journal, Ianthe Jeanne Dugan
"Citi originally bought loan as part of arrangement with Prosper to roll loans into securities."
"The $28,500 loan that Syed Rizwan Farook received from an online
finance startup a few weeks before he and his wife allegedly opened fire
at a holiday gathering in San Bernardino, Calif., was actually funded
by Citigroup Inc.,
according to people with knowledge of the transaction.
Wall Street firm bought the entire loan as part of an arrangement in
which Citigroup agreed to buy hundreds of millions of dollars worth of
loans from Prosper Marketplace Inc., with the intention of packaging
them into securities, the people said.
After the shooting,
Prosper bought back the loan back from Citigroup, said the people with
knowledge of the transaction, because the situation was so extreme.
There is no indication either firm did anything wrong in connection with the loan.
Farook had a prime credit score and a solid job, and, like thousands of
other applicants, he passed a checklist confirming his identity,
employment history, as well as databases that list terrorist suspects,
the people said.
In a statement, Prosper said that “all loans
originated through the Prosper platform are subject to all identity
verification and screening procedures required by law, including U.S.
antiterrorism and anti-money-laundering laws. As part of our standard
procedures, we also confirm that all loan funds are disbursed into a
verified U.S. bank account in the borrower’s name. Like all Americans,
Prosper is shocked and saddened by recent events in San Bernardino.”
a drop-down menu, Mr. Farook indicated that he sought the money for
debt consolidation, according to people with knowledge of the process.
It isn’t clear how Mr. Farook used the proceeds from the loan.
deal with Prosper is part of a broader shift in which loans made by
so-called peer-to-peer platforms are increasingly backed by big
A subsidiary of Citigroup called CIGPFI Corp. in
October packaged Prosper loans into a $376-million security. These
packages make it possible for pension funds, insurance companies and
other large investors to get into the fast-growing field of online
Prosper, based in San Francisco, Calif., was among the
first of a new wave of online lenders, opening a platform several years
ago to match borrowers with investors to fund loans. Originally, the
loans were sold mainly to thousands of small investors, who would
collectively fund each loan, hence the name peer-to-peer.
business has grown rapidly, as borrowers turn to these platforms to
finance everything from funding weddings to small business endeavors and
real estate. Many are refinancing credit card debt, drawn by relatively
lower interest rates. Prosper has facilitated more than $5 billion in
loans. Lending Club
has financed more than $13 billion in loans; it began trading publicly late last year.
growth has drawn attention from big financial institutions that had cut
back on small loans in recent years, partly because of regulatory
pressure. Many large institutions, including J.P. Morgan Chase and Co. and BlackRock Inc.,
as well as a number of private investment funds, have begun pushing
heavily into online lending, buying up loans and then repackaging them
into securities that can be resold. Marketplace lenders are regulated by
both state securities regulators and banking regulators because they
are selling securities and lending money.
U.S. Treasury officials
this year began inquiring into the industry. A Congressional panel also
began an inquiry after the shootings. Officials are examining the
industry to determine if current regulations are adequate."
Saturday, December 12, 2015
San Bernardino Islamic killer Syed Farook got his $28,500 loan from an online finance startup funded by Citigroup. Farook 'had a prime credit score and a solid job.' No indication of wrongdoing in connection with the loan-Wall St. Journal, Dec. 11, 2015
Posted by susan at 4:59 AM