Credit and Fraud as Growth Constraints

On 9 May 2016 Renaud Laplanche resigned as chief executive of LendingClub, the company he had launched in 2007 as a Facebook app matching borrowers with individual lenders and had taken public on the New York Stock Exchange in December 2014, closing its first day worth about $8.5 billion. An internal review had found that $22 million of loans had been sold to an investor against its instructions, that application dates on some loans had been altered, and that Laplanche had not disclosed a personal investment (company, reported). The shares fell about 35% that day and never recovered their IPO price. The sums involved were small. The damage was large because LendingClub owned no deposits: it lived on the willingness of investors to buy the loans it originated, and that willingness depended on trust in its processes.

Under Scott Sanborn the company settled with the SEC in 2018 and the FTC in 2021, closed the retail notes that had defined it in 2020, and bought Radius Bank, closing on 1 February 2021, so that it could fund loans with deposits. When rising rates drove loan buyers away in 2023, its originations fell 43%, but it survived on its own balance sheet. In 2025 it earned $135.7 million, with $9.8 billion of deposits and $11.6 billion of assets, and on 22 June 2026 it renamed itself Happen, Inc. This chapter explains why credit and fraud, rather than demand, usually set the speed limit for a lending business, and why the limit is often hit first through funding and compliance.