It seems that regulators in Pennsylvania have had some misgivings about p2p lending. So, the PA Securities Commission issued this “warning” last week. A couple of other states followed up with similar warnings and the National American Securities Adminmistartors Association (NASAA) issued a warning as well that was picked up by Investment News yesterday.
Why? Because they want investors and borrowers to be “mindful of the risks of peer to peer lending.” Let’s thank the state regulators for stating the obvious. Investing money is inherently risky, and new investment vehicles such as p2p lending should be thoroughly researched before investing. Of course, p2p lending has risk, just like investing in anything other than US treasuries or FDIC insured deposits has risk. In fact, there is even risk with those investments because inflation may eat into your returns – but presumably you will never have any principal loss. [Read more…]