In fact the Wall Street Journal article suggests that Prosper Marketplace purchased the specific Farooq loan back from Citi not long after news broke of this issue, signifying the seriousness of the scenario and perceived reputational impact felt by both parties. The FT Alphaville ‘ugly duckling’ blog post also paints a picture of WebBank as an organisation with a legacy of negative compliance findings but albeit a positive commercial outlook at the time of the San Bernadino attack.
Could or should more have been done in this specific scenario is a question we will not try and answer here and is best answered by the investigators close to the enquiry but it is a natural question that starts to pervade the commentary. One thing that is clear is that for those entrepreneurs, businesses, investors venturing into the exciting and rapidly evolving fintech, payments and online loan space it will always pay to take a long term view on how you manage these risks. Is complying with regulation enough or when the chips are down can you or should you do more?
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