Peer to Peer Lending News Roundup – September 13, 2014

During the week I share the latest p2p lending news on Twitter as it happens. Then every Saturday I take the most interesting news items and blog posts from the past week and share them here.

The Economic Health of a Borrower’s City Affects Loan Performance from Orchard – A guest post by a family office investor about how he decides which loans to invest in on Lending Club and Prosper.

Former BlackRock Executive Shifts to P2P Investor Blue Elephant from Crowdfund Insider – From the world’s largest asset manager to a p2p lending hedge fund.

LendingClub: Are Peer to Peer Loans Worth an Investment? from The Motley Fool – This analyst looks at the pros and cons of investing in the common stock of Lending Club.

Peer-to-peer lenders step into vacuum left by banks from TribLive – A look at peer to peer lending in western Pennsylvania and the impact it had on one borrower.

The Tithing of Credit Cards by James Alexander on LinkedIn – How p2p lending is impacting the credit card industry.

Fitch: Lending Club IPO to Be a Milestone in P2P Evolution (press release) – Fitch Ratings weighs in on the Lending Club IPO: “the P2P industry overall would benefit from a successful Lending Club IPO”.

Why the Lending Club IPO matters from London Business School – One of the most thoughtful articles I have read about the Lending Club IPO.

Prosper Investor Review: Earn 5-10% in Peer to Peer Lending from LendingMemo – Detailed review of Prosper with step by step instructions on how to invest.

International P2P Lending Services – Loan Volumes August 2014 from Wiseclerk – The monthly loan origination numbers from the major European platforms.

Why Your Neighbor May Soon Be Your Bank from The Fiscal Times – An introductory look at Lending Club and p2p lending.

UK peer-to-peer lending reaches £2bn from the Financial Times – Another major milestone crossed by the UK p2p lenders this past week.

Why the UK Peer-to-Peer Loan Market Has Doubled in Size in Just Six Months from International Business Times – The UK p2p lending market has been on a tear lately – here’s why.

From the Lend Academy Forum

The Lend Academy forum is where investors go to discuss p2p lending. Below are some topics that were being discussed this week.

New to LC – Need advice on deploying 250k – Active discussion from members about deploying a large amount on Lending Club.

Filtering by Income to Payments – One new investor is focused on a key ratio for borrowers.

FICO score across LendingClub grades – FICO score is one of many variables used to determine credit grade at Lending Club.

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Dan B
Dan B
Sep. 13, 2014 11:34 am

Re: Why the Lending Club IPO matters from London Business School – One of the most thoughtful articles I have read about the Lending Club IPO.

After the introductory bit that said, well nothing really, I confess that I only got through the next few paragraphs of this article. As I read on I found myself less & less interested as to where the “thoughtful” part was located & increasingly observant as to how many times the author was using the words disrupt, disruptor, disruption etc., in some journalistic version of tourettte syndrome. I counted 9 times in 3 short paragraphs before the article ceased to amuse me & I wandered off to the comparatively stimulating prospect of doing laundry.

Prescott
Sep. 15, 2014 12:35 am
Reply to  Dan B

This is exactly the kind of article you want coming up to an IPO!

> ‘They can out-FICO FICO.’

I can’t believe the big lenders out there use FICO as their only input to their credit curves.

> Lending Club is being more innovative and experimental, and with positive effect, than manager-led banks and credit card companies.

Somebody get this man a credit card portfolio from one of the large providers, he’s off his rocker. Different business though, revolving credit vs term loan – but he made the comparison.

> Google seems to recognise all of this which presumably explains why it bought an eight per cent stake in Lending Club in 2013.

https://www.gv.com/ – “We provide seed, venture, and growth-stage funding to the best companies — not strategic investments for Google.” They are like any other VC – investing in a good bet.

I’m bullish on the industry, I just think the “disruptor” is oversold, but if makes my stock go up, all the better 😉

Dan B
Dan B
Sep. 15, 2014 4:27 am
Reply to  Prescott

As I said above, boredom overtook me, so I didn’t read the whole article. You said that the author compared revolving credit to term loans? Did he happen to mention that institutional investors who have invested in revolving credit portfolios stretching back a few decades have consistently managed average returns in the 9%+ range………….a number that p2p hasn’t managed in any one single year of its existence, to say nothing of cumulatively? I’m guessing he left that part out?

Did the author mention that despite year after year of 1% CD rates, 1-2% treasuries, & under 5% yield for pretty much any type of US bond except the riskiest…………..that even in this type of perfect competitive environment, the total amount of lenders US p2p has managed to attract & hold is still less than 100,000 ? That’s a disruptor?
What would the cheerleaders et al call the closed end mutual fund business, I wonder? They’ve been around for decades, but are still almost invisible, have no Goolgle backing & no TV commercials. But they do have almost 4 million US investors & yet to the best of my knowledge, no ones ever referred to them as a “disruptor” of anything.

After 7 full years & hundreds of millions in VC backing, & having started during the most severe credit/ banking crisis of the past 70 years where loans were impossibly difficult for most to obtain………….. how many loans has US p2p actually made in all that time? Maybe, 700 or 800,000 loans, totaling $7 billion? That’s a disruptor to the trillion dollar banking behemoth? More like an an annoyance, if that much.

Valuation skeptic
Valuation skeptic
Sep. 15, 2014 2:12 pm

the valuation talk on this company is absurd. good biz, yes. worth $5bn…nfw

Observer
Observer
Sep. 16, 2014 2:31 pm

LC’s cost structure is no different than any online credit card company. They do not compete with retail banks. They compete with CapitalOne, Chase etc credit cards. All of whom acquire customers online, underwrite with FICO and use similar servicing and customer support approaches. Historically credit card companies had an unspoken agreement not to compete on price. That will change. And LC will have no defense against it.