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Roundup of Social Lending News – August 4, 2012

Roundup of Social Lending News – August 4, 2012

Peter Renton·
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··1 min read

Every Saturday I bring you the latest news from the world of peer to peer lending. These are the best of the news articles and blog posts from around the web that I shared on Twitter this past week.

Despite the UK being somewhat absorbed by the Olympic Games there were many articles from across the pond this week about p2p lending. But probably the most important article of the week came yesterday from New York Times financial columnist Ron Lieber. He has expressed concern in the past about p2p lending and while this article was about investing in general you can see that he is coming around to a more positive view of p2p lending. Enjoy your weekend.

NY Times – A Financial Plan for the Truly Fed Up

All Things Finance – Generate Income Through Peer-to-Peer Lending

Prosper – A Prosper.com spotlight: How Leonard paid down his credit cards for good

Bible Money Matters – Lending Club Returns At 12.02%: Lending Club Has Issued Over 775 Million In Loans To Date

AOL Money (UK) – Why I’ve started saving with RateSetter

NY Times – When Banks Won’t Lend, There Are Alternatives, Though Often Expensive

P2P Money Blog (UK) – RateSetter increase net lending to £20million

MarketWatch – Lending Club Taps Former Visa and Morgan Stanley Executive as Chief Technology Office (press release)

P2P Money Blog (UK) – Peer-to-peer lending exceeds £300million

DFW Preppers – Peer2Peer Lending: How Risky is it in Bad Economic Times?

Money Week (UK) – How to use money to make money

Random Thoughts – Mrs RT: Filtering the Currently Available Loans

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Dan B
Dan B
Aug. 4, 2012 10:05 am

I’d been happier if Lieber’s article had left out the Slow Money part. Including it leaves the whole article firmly stuck in the “fringes”, which is where p2p investing is today & from which it strives to escape.

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Peter Renton
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Peter Renton (@peter)
Aug. 4, 2012 2:19 pm
Reply to  Dan B

Let’s not kid ourselves – p2p lending is still stuck on the fringes. Lending Club has only 40,000 investors (based on their latest marketing page as of July 2012) and Prosper has less than half that. Yet there are what, 150 million investors in this country? It will still remain on the fringes for some time but we keep plugging away slowly growing the investor base.

But what Lieber has done is put it out there as an alternative. This kind of publicity does more for p2p lending than any manufactured press release. His article is the 4th most emailed article on nytimes.com right now so people are spreading the word. And for the typical NY times reader the Slow Money movement will probably resonate. I expect hundreds of new investors will come out of this.

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Dan B
Dan B
Aug. 4, 2012 3:44 pm
Reply to  Peter Renton

I’m thinking more like 60,000 based on what their CEO said in that interview you posted here a month ago. But ok you’re close.

The US certainly does NOT have 150 million investors……………..What are you counting? 6-10 year olds & their piggie banks?

Hell, Bank Rate monitor had an article last month that reported that their survey found that 46 or 48% of Americans (I forget) don’t even have 3 months of emergency savings! Are you calling those guys investors? One more comment like that & you’ll come across as being as disconnected as academics & the much derided one percenters. Oh wait, I forgot, you are. 🙂 But it’s ok because I’m guessing you made the comment just to get a rise out of me, so well done.

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Peter Renton
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Peter Renton (@peter)
Aug. 6, 2012 10:38 am
Reply to  Dan B

As for the Lending Club investors – I was quoting from their website: As of July 24, 2012, over 40,162 investors had funded nearly $758,258,500 in loans and received over $65,777,000 in interest payments.

And yes, I realize the 150 million number was high, I was just making a point that there are millions (whether that number is 5, 10, 50 or more is up for debate) of investors in this country. In p2p lending we measure investors in the tens of thousands out of an investor pool that is many hundreds of times larger.

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Megan
Megan
Aug. 6, 2012 12:36 pm
Reply to  Dan B

just an fyi there are lots of folks who invest money in the stock market before they have their emergency funds stashed. I had a mutual fund 16 years ago, and it was only in the last 3 years that I even considered having an emergency fund. Just putting that out there.

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Dan B
Dan B
Aug. 6, 2012 5:10 pm
Reply to  Megan

Interesting. I guess it begs the question as to why you did that. Was it part of a 401k or IRA?

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Sean
Sean
Aug. 6, 2012 1:50 pm
Reply to  Dan B

Agreed – the article summary seemed to indicate that the “alternative” investments listed, including p2p, were great options for tinfoil hat-wearing investors who ride around on buses audibly muttering about the evils of Big Business or bleeding hearts who would really rather make a social statement than make money anyway.

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Dan B
Dan B
Aug. 6, 2012 5:11 pm
Reply to  Sean

I got that impression as well.

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JW @ AllThingsFinance
JW @ AllThingsFinance
Aug. 4, 2012 2:20 pm

Thank you for including my acticle Peter – I greatly appreciate it.

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Gary
Gary
Aug. 7, 2012 4:07 pm

Personal opinion but I think P2P is on the fringes because of liquidity – if I want to unload shares of NetFlix because I think streaming will quickly become a ‘tech commodity’ that can be replicated, I can sell those shares in seconds – with 2000 loans on LC and Prosper, my exit would be tedious

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Dan B
Dan B
Aug. 7, 2012 4:31 pm
Reply to  Gary

That is somewhat of an extreme comparison & not really a fair one. You’re comparing 1 stock to an entire portfolio of p2p loans (i.e. consumer notes or bonds). Why don’t you compare an entire portfolio of stocks to an entire portfolio of p2p loans? You will certainly unload all the stocks in a flash…………….but only on a market order at whatever prevailing price……………& at whatever gain or loss that price entails.

With p2p loans, I once sold about 200 current LC loans at a 2% premium in 1 single month. I’d bet you that if I had to I could unload 1000 in 1 month at par to a 1% discount. So the loss would be minimal.

How much of a potential loss would someone unloading a portfolio of stocks in a hurry be exposed to? That could surely be a lively debate for another day.

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Gary
Gary
Aug. 10, 2012 7:01 am

My point was not about ‘needing to’ but rather ‘wanting to’ for whatever reason. Odd though it may seem, I consider LC and Prosper as 2 investments in my porfolio and I don’t doubt that I could sell them in a month or two but that’s not a “flash”; investors who like to re-allocate portfolios may give pause to investing in this unique platfom

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Dan B
Dan B
Aug. 10, 2012 8:43 am
Reply to  Gary

I don’t find it “odd” that you consider these as 2 investments in your portfolio, nor do I find it odd that someone may want to re-allocate in a flash.

These direct p2p notes are however by definition fixed income investments whose only function is to kick off a stream of income…………..Given that there is no substantial potential of price appreciation, the only thing I find to be a bit odd is why anyone would choose to wholesale re-allocate or liquidate in a “flash”, or in the manner that you seem to be suggesting. No offense but I know of no one who chooses to trade/sell non-appreciating fixed income investments in the manner that you’re implying…………..unless under some sort of emergency/financial hardship. Of course we can all agree that these direct p2p notes aren’t intended for, nor are they suitable as, a short term parking space for cash.

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