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Prosper is Dead

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Just a few hours after I received an e-mail from Lending Club announcing that they were open again, Prosper sent an e-mail saying that they were beginning their quiet period. This is just over 6 months after Lending Club entered it's quiet period. I believe that Lending Club got out of it's quiet period quickly due to a partnership with an existing broker member, FolioFn. It doesn't sound hard to believe that Prosper will go quiet for another 6 months.

The quiet period sounds a lot like Lending Clubs. There's not much indication how long it will take, but the indication is several months. During this time lenders won't be able to lend and people won't be able to sign up as lenders in the meantime.

Regular readers may note that the title to this post is a tongue-in-cheek reference to my previous post Lending Club is Dead. In honesty, I think that Prosper's huge first mover advantage over other peer-to-peer lending platforms, gives me more confidence that they can weather this storm than Lending Club did. In addition, we've seen Lending Club come through and resume business, so there's hope that Prosper can duplicate those results.

I feel that people should be asking a very important question here. Why is the SEC focusing on Prosper and Lending Club? Is it for consumer protection? Where was this regulation and scrutiny when banks were making mortgages so bad that a 3rd grader could realize the problem? Where were they when these CDOs we being created? While Americans lose more than a trillion dollars (between stock losses and bail out packages), the regulators are focusing on the small amounts of money the Prosper and Lending Club service. In the immortal words of Seth and Amy from Saturday Night Live, "REALLY?!?!"

Last updated on December 4, 2008.

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8 Responses to “Prosper is Dead”

  1. Tom says:

    It sure is a provocative title, but Prosper is not dead – just like Lending Club wasn’t dead. It took a little over 6 months for LC to register with the SEC and now they are open for lenders from 15 states. I wonder if Prosper will be quicker given LC did the hard lifting.

  2. Tom says:

    “Why is the SEC focusing on Prosper and Lending Club?”

    I wonder if the SEC is actually focusing on Prosper and LC or if this move is a decision they made and a fundamental change to their business model. A model which includes, among other things, a secondary market for loans.

  3. DebtKid says:

    Lazy ~

    What, no tombstone picture? Ha! Just kidding, crazy week in P2P lending…

  4. Lazy Man says:

    I was going to mention why I left the tombstone picture out. At the time of the Lending Club, a very new company, abruptly going dark with no notice, no sign for how long, and less funding than Prosper (from what I can tell), I really thought they’d go under.

    Prosper has enough time under it’s belt, had announced the SEC thing months in advance, says that it will be several months (at least a rough indication there), and sufficient funding to withstand that time.

    (Plus I thought the tombstone would get old.)

  5. Patrick says:

    I think Prosper will be fine. I see good things in the future for the P2P industry – especially if banks and traditional lenders tighten the purse strings for an extended period of time.

  6. Matt says:

    bamalucky has been making complaints to the SEC against Prosper and encouraging others to do the same. He reason was he couldn’t get a straight answer from Prosper on who owned the loans (Prosper or the people doing the $50 bids on a loan). So, he filed a complaint against Prosper for selling unregistered securities.

  7. Not sure what exactly you complained about? I’ve completed 1 loan with Prosper and am currently paying off 2 more with no problems whatsoever. If it weren’t for Prosper, I wouldn’t be nearly as far ahead in my current business as I am. Hopefully their quite period doesn’t last very long as I believe it provides a valuable service in our society today.

  8. Tom says:

    “In honesty, I think that Prosper’s huge first mover advantage over other peer-to-peer lending platforms, gives me more confidence that they can weather this storm than Lending Club did.”

    Now it looks like Lending Club is totally out-executing Prosper. Prosper just got two more strikes against it – a million dollar fine and pending class action lawsuit.

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