I did it

This morning I cleaned up my bookmarks file. In the process I deleted my bookmarks to prospers.org.

Will I manage not to type the address in the address bar of my browser? I don't know. We'll have to see how long it lasts. I think the first 12 hours will be the worst, then I should be able to start recovering my life. Do all the things I've not been doing.

Realistically, I've been done with Prosper.com since the incident when they redacted my and other users' posts in their new forums without showing that the posts have been edited. So we'd type in a link to prospers.org, and prosper moderators would change it to link to prosper.com. That's just dishonest. It was the end for me. I stopped my standing orders and I've been on a constant withdrawal regimen since then.

There's many of us over at prospers.org in that same boat. In my February 2008 review of lender sentiment, over 50% of the respondents indicated that they are only withdrawing funds from prosper.com. That leaves us with few real Prosper-related issues.

Traveler505's MNH (My New Hobby) reports are a beacon of light. Fred93's late loan statistics are interesting - they show that there is a distinct possibility that Prosper has started to turn around the horrible loan default rates that plagued Prosper during the first two years of its existence.

What does that leave us with? Squabbles and "popcorn" threads. The most amusing thing to do on prospers.org these days is to fight. Look at that horrible creditboards thread. That's what the membership put their energy into. Puzzles, games, trivia. The most buzzing part of the prospers.org boards is the Off-Topic area.

Then we have a fundamental "free-speech" problem. I'm all for free speech and allowing criticism. But I don't believe that we have to say this in the most derogatory way we can. Some members relish saying things harshly and cruelly. It's offensive and it drives away some of our members that are offended by that form of behavior.

Prospers.org is unique in my experience in that it does not regulate the interaction between it's members. Anything goes. And I'm not sure that is the right thing. There are many staunch supporters of that, and I realize well the difficulties in setting and maintaining standards, but does that mean that we don't have to have standards?

Whenever I observe the behavior over at prospers.org, two books comes to mind. William Golding's Lord of the Flies and a book from my school days - N.P van Wyk Louw's Raka (book not available in translation). It is hard to put into words exactly what I feel - I does seem as if we gravitate towards the lowest common denominator if we have no regulation.

There is no point in fighting for higher standards if what the population want are bread and circuses. I have to be realistic. The dream, the community, that was Prosper is no more and will never be. Many have realized it and moved on. It is time for me to do the same.

Prosper may yet succeed, but it has learned the early lesson: The dream of an Internet-based P2P lending site cannot be a "community." Too many people are too desperate and will say or do anything to obtain some money. Their ability and willingness to repay are frequently much lower than their stated intentions. Lenders are too gullible and greedy. We believe sob stories and lend money to those with a sad story to tell. We lend when the rates are unrealistically high.

What should Prosper do? Borrowers often misrepresent facts in listing descriptions. Other times listing descriptions cause soft-hearted lenders to bid on totally unrealistic loans. At the same time, the ideal of Prosper was to humanize lending and lend when and where banks couldn't and wouldn't. Will Prosper learn the lesson that banks and financial institutions have learned that the numbers portray the most realistic assessment of the viability of a loan? That will leave many would-be, deserving borrowers out in the cold. Fact of the matter is that there has not been enough successful lending on Prosper to make any other case.

The future of Prosper is where Zopa and LendingClub already are. Lower rates to lenders, at best a few points above CD rates. Numbers-based lending, shaving a few points off the rate spread between borrowers and lenders, but not dramatically different from what banks and financial institutions are offering. Chris Larsen should know this. After all, eLoan didn't make mortgages substantially cheaper to the borrowing public.

So, look for Prosper to adapt two things or wither on the vine. Firstly, they have to get a sensible process for borrower verification. They cannot continue with a haphazard, cumbersome process that is much harder and complicated than brick-and-mortar institutions use. Good customers will not put up with that. In my opinion, a borrower that puts up with some of the hoops Prosper makes them jump through is scarily desperate for money.

Secondly, Prosper has to improve it's anti-fraud and collections activity. It's not too late to aggressively pursue legal action against those that has already defrauded Prosper and its lenders. Creating a reputation of being tough on fraud is something Prosper desperately needs. This requires more than the pathetic example of fraud prosecution Prosper announced at Prosper Days 2008.

Collections on the other hand, is probably a lost cause. Many, many of the existing loans were made to borrowers that simply will never be able to repay those loans. Far better, in my opinion, is that Prosper puts more effort into making sure that future loans go to more capable borrowers. Not to say that there shouldn't be stronger collections activity, but you pick more strawberries in a garden than in the desert, if you get my drift.

So, arrivederci, Prosper and prospers.org. Wish me the strength to continue in my journey.