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[mhs505]

This note is under my account balance:

Your funds are placed in an account for your benefit at Wells Fargo Bank, which is FDIC insured. Learn more.

The learn more link takes you to this FAQ:

Are the funds I place in my Prosper lender account FDIC-insured?

Prosper is not a bank, and does not take and hold deposits. All funds Prosper lenders place with Prosper to make bids on borrower listings are maintained in a lender funding account at Wells Fargo Bank, which is FDIC-insured, for the benefit of the lenders. Prosper has structured the lender funding account such that the funds in the funding account at Wells Fargo Bank that belong to lenders are protected by FDIC deposit insurance up to $100,000 per lender on a pass-through basis. (The coverage amount may increase to $250,000 after the passage of recent legislation). In the period of time while any funds are on deposit in the lender funding account, they are protected from loss by the FDIC insurance coverage and federal bank regulation.

Can a moderator move this to the lobby?

[DCS]

What's new?  I thought our cash funds were always in a Wells Fargo account that was FDIC insured.  Am I missing something?

[fitznd]

What's new?  I thought our cash funds were always in a Wells Fargo account that was FDIC insured.  Am I missing something?

They probably received dozens or even hundreds of queries as to whether their funds were "safe."

[GaAs]

What's new?  I thought our cash funds were always in a Wells Fargo account that was FDIC insured.  Am I missing something?

That's right.  The difference is that before you had to dig to discover that the cash was in a segregated, FDIC-insured account.  Now they tell you right up front.

This is not a small deal, BTW.  It means that Prosper can't tap into your idle cash to fund its own operations, which is a critically important safeguard.  Otherwise that pot of money could look very tempting someday when payroll is due and there's nothing in the bank.

[cubbiesnextyr]

What's new?  I thought our cash funds were always in a Wells Fargo account that was FDIC insured.  Am I missing something?

That's right.  The difference is that before you had to dig to discover that the cash was in a segregated, FDIC-insured account.  Now they tell you right up front.

This is not a small deal, BTW.  It means that Prosper can't tap into your idle cash to fund its own operations, which is a critically important safeguard.  Otherwise that pot of money could look very tempting someday when payroll is due and there's nothing in the bank.

According to Prosper, this is also the reason they can't pay interest on idle funds.

[Mark12547]

A few months ago my credit union had an article on their home page about "Are my funds safe?" and they published the same article in their newsletter. I asked, and they said they were getting lots of questions about that, which is why they published that article.

The place where I have my 403(b) and the place where I have my taxable and Roth investments both have sent emails trying to calm down the fears that investors may have.

It doesn't surprise me that Prosper Marketplace, Inc., has promoted the language about our cash balances being at Wells Fargo with pass-through FDIC insurance higher up in their site--it was pretty buried in the Help section if one cared to dig around.

Can a moderator move this to the lobby?

Done.

[GLeaderAccountantsChoice]

What's new?  I thought our cash funds were always in a Wells Fargo account that was FDIC insured.  Am I missing something?

That's right.  The difference is that before you had to dig to discover that the cash was in a segregated, FDIC-insured account.  Now they tell you right up front.

This is not a small deal, BTW.  It means that Prosper can't tap into your idle cash to fund its own operations, which is a critically important safeguard.  Otherwise that pot of money could look very tempting someday when payroll is due and there's nothing in the bank.

According to Prosper, this is also the reason they can't pay interest on idle funds.

LC keeps the interest it earns on money held for its members.   I don't see why PMI isn't keeping this either.  Also, why can't members earn interest on idle funds?  Etrade will give members interest on idle funds...

If PMI were to go BK, there is no guarantee that your money would be safe.  If you bid on a loan that had yet to be finalized and funded for example before PMI went BK, you could be out your money completely.

[cubbiesnextyr]

What's new?  I thought our cash funds were always in a Wells Fargo account that was FDIC insured.  Am I missing something?

That's right.  The difference is that before you had to dig to discover that the cash was in a segregated, FDIC-insured account.  Now they tell you right up front.

This is not a small deal, BTW.  It means that Prosper can't tap into your idle cash to fund its own operations, which is a critically important safeguard.  Otherwise that pot of money could look very tempting someday when payroll is due and there's nothing in the bank.

According to Prosper, this is also the reason they can't pay interest on idle funds.

LC keeps the interest it earns on money held for its members.   I don't see why PMI isn't keeping this either.  Also, why can't members earn interest on idle funds?  Etrade will give members interest on idle funds...

If PMI were to go BK, there is no guarantee that your money would be safe.  If you bid on a loan that had yet to be finalized and funded for example before PMI went BK, you could be out your money completely.

Prosper has repeatedly said they can't give interest on idle funds because of the way the funds are deposited at WF... I never said they were right or not, I'm just saying what they've said.  We've talked about this many many times before though, so doing a search will find out all the relevant information.

[112233]

Prosper is not a bank

boy, that must have been news to the people running the company

ETA added quote tags to MHS's post because I guess she expects us to do that for her.

[GLeaderAccountantsChoice]

Prosper is not a bank

boy, that must have been news to the people running the company

I hope not (from LC):

 If we are required to register under the Investment Company Act, our ability to conduct our business could be materially adversely affected.
 
The Investment Company Act of 1940, or the “Investment Company Act,” contains substantive legal requirements that regulate the manner in which “investment companies” are permitted to conduct their business activities. We believe we have conducted, and we intend to continue to conduct, our business in a manner that does not result in our company being characterized as an investment company. If, however, we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which would materially adversely affect our business, financial condition and results of operations. If we were deemed to be an investment company, we may also attempt to seek exemptive relief from the SEC, which could impose significant costs and delays on our business.

[mhs505]

Prosper is not a bank

boy, that must have been news to the people running the company

It is completely disingenous to put only that in a quote box and attribute it to me.   

Those are NOT my words, it is simply a repost of PMI's wording. 

[112233]

Prosper is not a bank

boy, that must have been news to the people running the company

It is completely disingenous to put only that in a quote box and attribute it to me.   

Those are NOT my words, it is simply a repost of PMI's wording. 

then learn how to use the quote tags if you are so damn sensitive.

.. I went ahead and edited your post for you

[onthefence]

Prosper is not a bank

boy, that must have been news to the people running the company

OK.  You caught me.  Now excuse me, I have a mass murder scheduled for this weekend.

Um, mhs505.  I think you need help.

[msava]

Am I to believe that Wells Fargo has each lenders name and amount on deposit? In the unlikely(?) event Prosper folds, do I have an account number? Can I call Wells Fargo to see how much money they are holding for me? Will this figure be quoted .00002 in keeping with Prosper bookkeeping?

[smyjpmu]

What's new?  I thought our cash funds were always in a Wells Fargo account that was FDIC insured.  Am I missing something?

That's right.  The difference is that before you had to dig to discover that the cash was in a segregated, FDIC-insured account.  Now they tell you right up front.

This is not a small deal, BTW.  It means that Prosper can't tap into your idle cash to fund its own operations, which is a critically important safeguard.  Otherwise that pot of money could look very tempting someday when payroll is due and there's nothing in the bank.

Hmm, does this also mean there's no chance of the current shutdown of lending causing a sort of "run on the bank", where everyone withdraws their funds at once and forces Prosper into bankruptcy?

I'm really worried about Prosper going bankrupt right now.  Sure, in most scenarios the loans would probably be bought up by someone, but in the current environment I don't see any way we'd get face value and probably not even fair market value.

Too bad Warren Buffet's already tapped out.  Maybe Henry Paulson can throw some of that $700 billion our way?  I want out.