SEC lets Citibank live, shoots Prosper.com for competing with gov't lending racket

[metalman]

failed citibank = good, successful prosper.com = bad.

SEC formally orders peer lender Prosper to cease and desist

The Securities and Exchange Commission this week issued a formal cease and desist order against peer-to-peer lender Prosper Marketplace Inc.
The San Francisco company said in October that it was no longer accepting new lenders or loans as federal regulators consider the company’s application to establish a secondary market for loans made on its person-to-person lending site. That process is expected to take months.

they've been around for years. why go after them down now? ah, here's the problem...

Peer Lending Spreads In Tight Credit Market

Borrowers hurt by the credit squeeze and investors looking to boost their returns are increasingly turning to the same place: peer-to-peer lending. The loans can be quicker than going through a bank — and offer rates of return that can beat those of government bonds.Companies such as Lending Club and Prosper Marketplace match individuals who want to borrow money with those who have money to lend. The process happens online, without a trip to a traditional bank.

that explains the timing. usa doesn't like startups competing with investment banks, er, i mean commercial banks, or whatever they are these days.

prosper.com should move to... costa rica?

[algerwetmore]

Re: SEC lets AIG live, shoots Prosper.com for competing with gov't lending racket

This situation reminds me of the mafioso "boss" on trial for racketeering.
He testified that he thought it was a "free market" economy, but he found out that the U.S. Government hates competition.

[tsetsefly]

Re: SEC lets Citibank live, shoots Prosper.com for competing with gov't lending racket

this story infuriates me more than any other...

banks lend out money make risky "investments" and lose money...
now we have a credit crisis and the senate reprimanding banks for not lending...
yet we have institutions like these lending and the government doesn't like it because they are not part of the "financial insiders". Hence the problem with government force backing government issued "licenses"...

This is another "sign" for those that think government is actually working for us.

[blazespinnaker]

Re: SEC lets Citibank live, shoots Prosper.com for competing with gov't lending racket

To be fair, I think prosper just has to file with the SEC.

I don't think they're actually getting shut down.

[we_are_toast]

Re: SEC lets Citibank live, shoots Prosper.com for competing with gov't lending racket

I became a lender on Prosper a couple of years ago. It took me a couple of months to realize what kind of people show up to get loans. Very few lenders actually make any money there.

The concept is still great and I doubt the government will interfere too much with peer-to-peer lending, but Prosper has some pretty big kinks to work out of their operation. I still use them as kind of a barometer for the economy as a whole and surprisingly I haven't seen a large increase in defaults in my portfolio.