Just when Americans need small loans the most, the SEC shuts down innovative lenders.
By Hans Eisenbeis of The Big Money
The Internet has spawned many regrettable things, such as dancing babies, sneezing pandas, and Star Trek porn, but peer-to-peer lending isn’t one of them. The Web really has created some unique new situations and business opportunities that not even the omniscient Framers of the Constitution could have foreseen. Like electronically bringing together anonymous people who wish to lend their money to other anonymous people in a double-blind auction, facilitated by high tech-Web 2.0 technology of the sort eBay uses. That’s precisely what sites like Prosper, Lending Club, and Loanio are trying to do: use the Web to create a network of regular people who wish to borrow and lend money to one another, at agreed upon terms that are a result of bidding and counterbidding. The Web sites even allow pools of people to fund loans partially in amounts that typically range from $1,000 up to $25,000, and to resell their loans to other members. It’s like adultfriendfinder.com for financial hookups, minus the tawdry photos. And it’s been working beautifully.
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