As more consumers and small-business owners skip the bank and turn instead to online lenders for loans, policymakers in Washington, D.C., are looking more closely at the operations to determine whether they should be more tightly regulated, the New York Times reported today. While it is widely acknowledged that the lenders provide a vital service by making business financing faster and easier to obtain, elected officials and some experts in the field have expressed concern about the opaque terms and high interest rates on some loans. Because the online lenders operate outside the traditional system, they face fewer regulatory restrictions than mainstream banks. Lawmakers and government officials have taken a fairly hands-off approach to the industry so far, but those in the industry acknowledge that the scrutiny on them is increasing — and new rules may follow.
