Wall Street banks limit their support for online lenders

New York

WALL Street banks are scaling back their role in supporting debt sales that have helped online lending companies double their originations every year since 2010.

Investment banks earn fat fees by helping lenders pool and store their loans until enough are aggregated for sale to investors. But Goldman Sachs Group Inc, Credit Suisse Group AG and JPMorgan Chase & Co are among the Wall Street firms considering limits to their financing for companies that lend to certain higher-risk borrowers, people with knowledge of the policies said. The caution comes in response to a May ruling by the US Appeals Court in Manhattan, which threatens to remove a protection that non-bank lenders have relied on to make high-interest loans. The issue boils down to whether these lenders can pay a bank in an unregulated state to make loans to borrowers in other jurisdictions, where the interest rates could be considered usurious.