Social Lending - The end of Bankers power

[OptionsTrader]

http://www.prosper.com

 

[angelatc]

People store 1000.00 in your vault.

You loan 800.00 becuase you can only loan what you have ( anti -fractional ) and then they default... the other people want their 1000.00 back... your sunk.

In "It's a Wonderful Life" the people were required to give a certain amount of notice to the buildling and loan before they withdrew all their money.

 

[A Ron Paul Rebel]

M3, read it again!

That was NOT spam.

He's excited about this sweet way to boycott big bankers.

 

[mcgraw_wv]

Ideally, I should be able to delegate the loaning responsibility to banks who are more knowledgeable and judicial in assessing a loan's risk than I would be or could be interested in.

Does this kind of thing means I no longer delegate that responsibility? Not saying that it's bad thing, only wanted to know if I didn't have the appetite, could I entrust someone else to do the assessment?

Well at lendingClub, they rank the loans for you

A1,A2,A3
B1,B2,B3
C1,C2,ect....

So basically, the person who only wants 1000.00 and have good credit, and small credit ultization is going to be a A loan. however you wont make as much money off loaning them money.

Basically... if you simply want to make safe investments, you cna rely on the laon scores and just invest in A1 loans... there aren't too many of those...


I understand what your thinking, you want a bank to do it for you... when they do, you get 0.25 in your savings account, while they make 10% on your money...

If you take 5 minutes to research a loan, you make 10% and they make nothing...

Completely cut out the bank.

 

[angelatc]

But how do you know that they're really investing the money where they say they are?

 

[mcgraw_wv]

But how do you know that they're really investing the money where they say they are?

You don't...
Don't get me wrong, there is risk...


If we knew, we might even give better rates... For example, Housing rates are so low because you are buying something with value... 6% for housing, good luck getting 6% on a personal unsecured loan.


These sites are more for personal loans, credit consolidation, ect...

I personally do not lend to anyone requesting over 15k becuase someone who needs to go to the internet for that kind of money, really screwed up.

So I stick with a lot of small loans to hedge and blend my rate of return and protect against default.

 

[Hook]

Already things like this called thrift banks. And they are even legit.

You are never going to compete with the Fed unless you can counterfeit money from thin air as well as they can, and you don't get caught.

 

[ghemminger]

PM if you want to sponsor me for prosper.com or other lending sites - I'm interested

 

[ghemminger]

My wealthy friend makes all of his money in this way - he lends re investors the full amount on property investments and takes back a 1st trust deed - he charges somethings like 10 pts and 10%

 

[Deborah K]

me3 is eternally posturing for a moderator position, don't pay too much heed to it. The point of your post appears to be to discuss private lending. I think it's a very good idea. An idea I've had is to create a FULL RESERVE bank. Not the fractional reserve thieving bullshit. I just don't know what, if any, laws are in place that I'd have to worry about. I wouldn't be surprised if the FDIC has some method of shutting such a bank down.

Speaking of fractional reserve banking...last week my husband went to the bank to pull out 6k and the bank didn't have it.........

 

[Deborah K]

Already things like this called thrift banks. And they are even legit.

You are never going to compete with the Fed unless you can counterfeit money from thin air as well as they can, and you don't get caught.

Yeah, but they can't stop us from starting "survivalist" meet up groups in our communities that use the bartering system and gold and silver for trading purposes amongst ourselves...if we all did it through our Ron Paul meet ups as well as getting the ham radio clubs, gun clubs and associations, minutemen, etc. involved in each of our communities, it could be big.

 

[Broadlighter]

How about doing this? Lend out the money at no interest. That'll really mess with the banks.

Perhaps you can charge a transaction fee, due at the retirement of the loan for profit, but seriously, the money is all at risk in this kind of deal. The Fed creates non-risk money, meaning, no one has earned it the time it's loaned out.

 

[Sarge]

have been intensively studying both sites today.

I lean towards the LendingClub for the following reasons.

FDIC insured on your cash in your accounts. They use Wells Fargo. They pursue defaults on payments. They explain their charges where the other site does not comment on any of these issues.

I must say it got my attention as a way to loan money at a better rate of interest. One must do their research before you invest, and check out the credit scores of those seeking loans and your ability to take risk. Spreading your risk over several requests for loans might off set any defaults.

I will say the second site gave more information on defaults against total loans than LendingClub. LendingClub did not detail that information.

The second site was clear on the debt to income, which in my opinion which can help an investor.

Both sites offer an opportunity, but all should study well before plunking any money down.

I did see some plunking money down on requests for loans on the second site where I would not touch them with a 20 foot pole. Their site was easier to read to pick that up.

Just beware, but the right site, and the right reasons might make for some profits and help others.

Just IMHO.

 

[forsmant]

Prosper.com are unsecured loans. That means if they default you are screwed.

A full reserve bank should not loan out its deposits, that makes it a fractional reserve bank. If the Full reserve bank wants to make loans, it would have to with its own money or allow its depositors to share the risk like prosper.com. Upon default, both the bank and its depository investors lose money, but they gain total control of the collateral used in the loan. Much of the losses could be recouped upon liquidation of those assets.

Full reserve banking is discussed in this thread
http://www.ronpaulforums.com/showthread.php?t=125451

 

[Hook]

Yeah, but they can't stop us from starting "survivalist" meet up groups in our communities that use the bartering system and gold and silver for trading purposes amongst ourselves...if we all did it through our Ron Paul meet ups as well as getting the ham radio clubs, gun clubs and associations, minutemen, etc. involved in each of our communities, it could be big.

Yes you can, but there is no way you can compete on a yield basis with a bank that can print the money. You have substantial risk because you had to earn the money you lend, and therefore need to charge a higher interest rate to make enough money over the long run to make it worth your while. Meanwhile the Fed can just print up some money and lend it out with no more risk than the cost of the ink to print the money. So they can charge below-market interest and still make money.

When the Fed lowers interest to 2%, how are you going to compete with that? Even if you get 5%, you are actually loosing money in terms of real value due to inflation.

The central bankers have it all figured out so that you can never beat them at their game legitimately. The only way you are going to win is if people loose faith in the currency to the point that they will only use gold.

 

[mcvac]

This is what the Vietnamese do...I know the community pretty well...They do not trust our banking system...so a group of elders act as bankers and hold the money...When someone wants a grocery or nail shop...it's lent out of the pool...I am sure though that defaulting on this group is very ugly though....

 

[bomybomy]

Yes, I think that can fund the $1 Billion dollars per day in mortgages that fund!

 

[Ron LOL]

There's a more popular version of this idea called, IIRC, Prosper...it's interesting, because when you don't have collection agencies at your disposal, suddenly "credit worthy" becomes a much more difficult thing to be.

 

[IPSecure]

Let's go for the "Ron Paul Revolution Bank & Trust"!

Have our own currency like the BerkShares...

BerkShares: Local Currency for the Berkshire Region
http://www.berkshares.org/

 

[mcgraw_wv]

Here is where I think the major theme of banking independence comes from using these sites.

When more and more people start using these sites, traditional banks are losing their markup on lonns from the Fed. People are paying off deb from banks to consolodate with social lending, which removes money from banks, which based on fractional lending, for every dollar you remove from their hands, thats 10.00 they can't lend out.

Now they are borrowing money fromt he Fed, they are having a harder and harder time lending it out for profit, interest rates drop to attract business, and their profits drop...

Then when people realize that we as a society is far better off leaning on ourselves than corporations, banks will start dropping off as competition for lending money eats away at teh bloated system...

What will eb left is a few mega banks that cater to corporate lending for business while the home lending and personal loan lending basically is regulated to people to people lending...