While the toxic fallout from the financial services and banking crises engendered America’s Great Recession and economic hardship worldwide, it ultimately resulted in new, unexpected business opportunities.
The public blowback against too-big-to-fail financial institutions spawned innovative online concepts such as Kickstarter, which uses crowdsourcing—tapping friends, family, and sympathetic strangers—to fund nascent projects.
It also buoyed the prospects of emerging alternatives to traditional personal loans. After often handing out money willy-nilly in the run-up to the financial collapse, commercial banks overreacted in its wake, leaving borrowers scurrying in search of cash. Once again, the Internet provided a solution: Lending Club, which plays online matchmaker by pairing people in need of a loan with investors willing to stake them to one—in essence, a sort of fiscal eHarmony.
“The investor and the borrower don’t know each other,” explains Chaomei Chen, MSE ’88, Lending Club’s chief risk officer. “We evaluate the borrower’s creditworthiness and present that to the investor. And the investor, based on their risk type, can pick up a loan” that best suits him/her. “Our technology platform gives both institutional and individual investors access to a certain class of asset that in the past they did not get a chance to explore directly.”
Launched in 2007 with 100 percent individual investors, the San Francisco–based Lending Club has arranged more than $2 billion in loans to date, with institutional investors such as venture capital firms signing on after witnessing the service’s success, growth, and, most important, high rate of return.
Chen joined Lending Club in June 2011, jumping to the online startup after working nearly 25 years for established bricks-and-mortar firms such as JP Morgan Chase, PNCNational Bank, and FleetBostonFinancial. As LC’s chief risk officer, she defines and implements the company’s credit policy while monitoring compliance with existing laws.
Born and raised in Beijing and the daughter of a translator father and schoolteacher mother, Chen earned an undergraduate degree in math in China before teaching there for four years. She moved to the United States in January 1986 and entered the graduate program in applied mathematics and statistics at the Whiting School that same year, thriving despite the inevitable culture shock.
“Chaomei was an enthusiastic and energetic student in my probability theory and stochastic processes courses,” recalls John Wierman, a longtime applied mathematics and statistics professor at the Whiting School. “She competed with my first doctoral graduate and a current Hopkins faculty member for the top of both classes.”
While completing her master’s in 1988, Chen took a part-time job as a statistician with Citicorp (now Citigroup) in Towson. “It dawned on me how much we can utilize what we learned in applied mathematics in the real world,” she says. After assuming a full-time position with the company, she returned to Hopkins to take economics courses in what was then the School of Continuing Studies.
Long active in Whiting School alumni events in San Francisco, where she lives with her husband, Chen became a member of the School’s National Advisory Council in 2013, and visited the campus in May to give the Harriet Shriver Rogers Lecture (“Risk Management in Business and in Life”) during the annual Convocation Awards Ceremony.
In a sense, she’s honoring her Johns Hopkins experience. “Hopkins gave me a great foundation in applied mathematics and basic economics,” she notes, “and I was able to leverage that into my subsequent career.”