People to People Lending with Prosper

Google TechTalks
June 28,2006

Karen Appleton
Andrew Martinez-Fonts

ABSTRACT
Prosper is America's first people-to-people lending marketplace, and was created to make consumer lending more financially and socially rewarding for everyone.

The way Prosper works is intuitive to people who have used eBay.

Instead of listing and bidding on items, people list and bid on loans using Prosper's online auction platform.

People who want to lend set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select.

People who lend can easily diversify using "standing orders", which automatically make many small loans to different borrowers....

Category:

Howto & Style

Tags:

• google
• howto
• people
• lending
• prosper

[jupiterdingo]

In other words, the bank actually making the loan could make ten similar loans or more on the cash it takes in for one loan from Prosper lenders because of the fractional reserve lending system in the US. Prosper "lenders" potentially can make a pretty good return, but only a fraction of what their money allows the bank actually making the loans can make.

[jupiterdingo]

As the speaker mentions: the "peer-to-peer" aspect is an illusion. The borrower is actually getting a loan from a bank in Utah, and the loan is in effect collateralized by the Prosper "lenders." The bank need only keep less than 10% of those funds on deposit when it makes the actual loan (fractional reserve lending rules). The rest of the loan is funded from thin air -- how money is created in the US. So the bank profits ~10 times the investment of the "lenders," using the "lenders'" money.

[NorEaster07]

I've used prosper and I must admit, its a great platform. I borrowed money which I'm still paying off and I helped lend money to someone in need.

It's a great concept and maybe we'll one day get rid of those bully big banks. :)

Great way to invest your money too.

[tyrell92]

sounds good to me. Im in.

[lhsbandnurd]

You are correct, obliged is a more accurate descriptor. I do not work for Prosper, and as such would never be 'obligated' to tell anyone anything about them.

[lutzie200]

Shouldn't it be "I feel 'obliged' to point out..." 'Obligated' carries a legal meaning that is different from obliged.

[lhsbandnurd]

Also, and more importantly, Prosper has recently replaced the Experian data with its own, searchable, default/late data.

[lhsbandnurd]

I feel obligated to point out that Karen no longer works for Prosper Marketplace, Inc. and hasn't since early in 2007.