Q&A: David Klein, CEO, CommonBond

• Published in: Total Securitization
• Main Author: Scully, Matt
• Format: Trade Publication Article
• Language: English
• Published: New York Euromoney Institutional Investor PLC 03.02.2014
• Subjects: Advisors; Bond issues; Business growth; Chief executive officers; Consumer protection; Investment companies; Klein, David; Securitization; Student loans; United States > US
• ISSN: 1938-7504

CEO David Klein spoke with SI reporter Matt Scully from his office in Brooklyn, saying he hopes to issue a $100-$150 million securitization by mid-2015.The sector is evolving, Klein said: "It is clear that the peer-to-peer industry in the U.S. includes institutional capital, with a smaller portion of retail investors. I actually think you'll start hearing more of the phrase'direct online lender' than'peer-to-peer' in the coming years." Klein also discussed the branding of the peer-to-peer market, CommonBond's potential to grow beyond student loans and why the Consumer Financial Protection Bureau may not be so bad after all. DK: We expect to almost double employee growth over the next three to six months. The key positions include head of capital markets. We're looking for somebody who has been on the Street, who has done securitization, structuring, worked with folks on the Street. We're also looking for a chief technology officer. This one is interesting because there are a lot of tech-savvy people in finance who are dealing with old technology, so that role is open and it's a great opportunity. The third key opening is for a head of business development, as we look to build on the acquisition-borrower side of the market. DK: It's very high credit quality, with FICOs in the 750 range. You're looking at income well above $125,000 a year, you're looking at folks with a history of repaying their loans. We would expect lifetime cumulative net loss to be under 1%. We are exceeding those expectations right now. With just around a year of operating history, we have 0% default and 0% delinquent. That's big because with student loan asset classes, most defaults happen by year two or three.