I'm not too sure I got this story straight, my source on this was a tad hesitant and gave me the information via a number of links to other websites, including Wikipedia.
It seems that if one deals in "virtual assets" that represent stuff (such as a loan where one does not actually own the loan), trading in such assets falls directly under the auspices of the SEC. So in the LendingClub model, their "LendingMatch" concept might have fallen foul of regulations.
My source implied that LendingMatch pooled lenders' money without giving them a direct stake in a loan, but I'm not too sure about this. If my memory serves me right, that's how I invested my money on LendingClub. I let LendingMatch find me a number of loans that matched my criteria. As far as I can see, I now have 17 loans from that, not a pooled interest in some loans.
This comes from financial small-talk with smart people in a social environment. They might not have all the facts, and since they're not dispensing legal advice, they make some assumptions. However, if this person is correct, or if the SEC misinterpreted how the LendingMatch works, I can see that Prosper's Portfolio Plans could be right in the same ballpark.
For both the Prosper Portfolio plans and for LendingMatch, the lender gives and estimated (desired) return and the Portfolio Plan (or LendingMatch) selects appropriate loans that fit the criteria.
That brings on the question about what happens 2 or 3 years down the road when the Portfolio Plan or LendingMatch doesn't deliver on the advertised rate? Hmmm....
Tuesday, April 22, 2008
LendingClub - is this why they went quiet?
Subscribe to:
Post Comments (Atom)
2 comments:
In support of this theory read this link:
http://www.thickenmywallet.com/blog/wp/2008/04/15/what-the-p2p-lending-industry-doesnt-want-you-to-know-of-lending-club-and-prosper/
Don't know if it is correct and applies to Lending Club
Hi HollowOak - Your sources are vague and off, I think. I'll skip my own speculation on the matter, even though I think it's better. :)
On LendingMatch, though: The only problem I saw with it is that it puts LendingClub in the position of (blackbox style - variety of factors, some of which aren't disclosed or user-definable!) self-selecting the loans that it sells to the lenders... that's... probably a not a terrific idea.
Honestly, I kind of thought the whole LendingMatch thing was just web2.0 social media fluff (facebook residue!) and doubted it really even existed as anything other than marketing - it always sounded kinda dopey to me - i can't imagine what an effective algorithm for doing that would be based upon other than say "carpenters lend to carpenters", "x% preference to borrowers within y miles of lender" - "those who lie about goingto harvard will get money from those who did go to harvard" - totally ridiculous crap like that, though i kind of like the last one.
Was what your source trying to say that, for a brief moment between the lender funds being put in an LC portfolio and their placement in a particular loan, that they were essentially pooled, for use by LC?
Anyway, I don't see the parallel to Prosper's infinitely tweakable portfolio plans, on the other hand, as those are fully user-defined, and fully transparent - so, I don't get how that could be construed as anything other than a fully (albeit agent-automated) independent choice on the part of each prosper lender.
Funny how it's all about agency in the end... PM me if any gossip!
Post a Comment