Comments on: Social Lending is maturing | web 2.0 meets reality

By: Colin

Colin — Tue, 02 Dec 2008 03:27:45 +0000

Jim – First off I cannot believe I am on the side of the government, however ….

RE: “And we have plenty of laws on the books to protect investors from fraud and criminal wrongdoing”

I think we are agreeing that such laws exist for a reason. We can debate the quality of the law, and the applicability to internet situations, but I take it from your comment that we agree some protection is required so that we don’t have south sea bubble situations.

By: Jim Bruene

Jim Bruene — Tue, 02 Dec 2008 00:34:05 +0000

You said:

“The degree of regulation is certainly something that can be debated, but not whether there ought to be regulation.”

I disagree.

In the U.S. anyway, we do not need ADDITIONAL regulation. P2P lenders were already originating loans under the auspices of state lending licenses or by originating through a regulated industrial bank and then reselling the loans to investors.

We also have truth in advertising regulations and a host of other consumer protection laws on the books.

And we have plenty of laws on the books to protect investors from fraud and criminal wrongdoing.

It’s ridiculous to make p2p lenders register every $50+ loan as an individual security. It’s a waste of taxpayer resources (at the SEC), not to mention how it stymies innovation.

These P2P marketplaces are exceedingly open and self-regulating. Unlike some of the worst examples from the current financial crisis, the p2p participants know exactly what they are buying and are learning through trial and error how risky these loans can be.

We’d be better off if the SEC resources assigned to the tiny P2P market would be reassigned to any of the multi-billion dollar black holes that have opened up on Wall St.

By: Simon Deane-Johns

Simon Deane-Johns — Thu, 27 Nov 2008 14:55:57 +0000

I agree. Let’s remember that social lending as we know it began less than 4 years ago (hey, I was there!) , and relies on penetrating two giant markets in savings/investments and consumer credit. This is a gargantuan task, but the rewards for everyone – especially consumers – will be huge. The venture money certainly agrees that it’s a task worth taking on. That said, steadily increasing volumes means that social lending is working its way further and further into the mainstream consumer’s “consideration set”, but “maturity” is a long way off.

Interesting that Zopa in the UK (and Italy) faces none of the issues Claus’s list, and the biggest challenge is not on it: consumer inertia.

As the late Richard Duvall was fond of saying from time to time, “Keep going! And going. And going and going and going…”

By: Colin

Colin — Wed, 26 Nov 2008 19:55:44 +0000

Claus … Thanks for that.
Colin

By: Claus Lehmann

Claus Lehmann — Wed, 26 Nov 2008 18:51:33 +0000

Colin,

p2p lending as a business model despite the bad news has still great chances and opportunities – otherwise Comunitae would have not succeeded to raise 2M Euro in funding in these circumstances.

However most services face more and higher hurdles to cross than the “average” web 2.0 startup.

There are:
– higher than expected defaults
– regulation issues
– fraud prevention
in some cases add
– currency exchange risk

Yes the hurdles are high – but I think the rewards if a service sucessfully overcomes these and reaches a critical mass establishing itself as the market leader in a (national) market are too.

And as you said, it is potentially disruptive – it might change the industry – not in 5 years, but maybe in 10-15 years.

I wish you a successful start with Communitylend

Claus
http://www.p2p-banking.com