Raj Date, the former deputy director of the U.S. Consumer Financial Protection Bureau, has rejoined the board of online peer-to-peer lender Prosper Marketplace Inc. as the industry braces for increased scrutiny from regulators.
Date, 42, becomes the fourth board member at Prosper, a closely held startup that arranges loans of $2,000 to $35,000 to help consumers consolidate debt or remodel a home, the San Francisco-based company said today in a statement. Date stepped down from the board in September 2010 to join the government.
Peer-to-peer Internet lenders are attracting capital and talent as they compete with brick-and-mortar banks for consumer loans. Last year, former Morgan Stanley Chairman John Mack, 68, and ex-U.S. Treasury Secretary Lawrence Summers, 58, joined the board of LendingClub Corp., Prosper’s larger rival. The two firms, which may be subject to CFPB scrutiny, have funded more than $2.5 billion in loans since 2006.
“It’s a terrific concept and terrific team,” Date said in a phone interview. ’’I am thrilled to be joining the Prosper board.’’
Peer-to-peer lenders raise money from retail and institutional investors and then provide loans to consumers, collecting servicing and origination fees.
Date, a former consumer-finance executive at Capital One Financial Corp. (COF) and investment banker at Deutsche Bank AG, runs Fenway Summer LLC. The Washington-based consulting firm works on mergers and acquisitions, advises clients on business strategy and invests in startups. Date, a Boston-area native, named his company after that city’s Fenway Park, where baseball’s Red Sox play.
“Raj’s addition to the board is a significant milestone for us,” Prosper Chief Executive Officer Stephan Vermut said in the statement. “Raj’s experience and insight will be a huge asset as we continue to grow.”
Date, the CFPB’s first deputy director, helped Elizabeth Warren set up the agency in 2010 and 2011 and led the bureau before President Barack Obama appointed Richard Cordray as its first director. Warren, a Democrat who pushed for the CFPB’s creation, was elected to the U.S. Senate last year by Massachusetts voters.
The 2010 Dodd-Frank Act created the CFPB and empowered the agency to regulate non-bank lenders. The bureau’s authority may extend to peer-to-peer lending, according to a July 2011 report from the Government Accountability Office, the investigative arm of Congress.
Prosper, founded in 2006, wrapped up a $20 million fundraising led by Sequoia Capital in January. Prosper originated $27 million loans in June and more than $560 million since its founding.