*argh*
I confused the puff piece linked to the front page of the Prosper home page (which is from 2008) to the puff piece from 2009 that's linked on the home>>about us>>media room>>in the news.
Which means it's harder to find on the site at least.
*******************************
In penance, I'm reading the rest of the links.
The Star Telegram piece gives glowing press for getting a student loan on prosper. Rates lower than other private non-government loans, but zilch about lender risk.
The Barron's piece is limited to 1 paragraph (before a subscription request), but the 40% default rate is in the still visible comment section. Just before some amazing name calling.
The Los Angles piece from 2009 has the expected Larsen quote:
'"We have a system that we think ensures that both sides get a fair deal," said Chris Larsen, Prosper's chief executive and co-founder.'
Since its inception in 2006, Prosper has registered a 19% default rate, Larsen acknowledged. The company has significantly tightened its lending criteria in the last few months and no longer accepts subprime loans, so Larsen expects that rate to improve. However, even Virgin Money reports that about 5% of its borrowers don't pay on their loans either.
(Gee, Chris, in 1 month it went from 19% to 5%???)
Wallet Pop has an audio interview with Chris from July 2009. Chris downplays the SEC issues. (Calls it a milestone within peer-to-peer lending.) Brags that lenders are their own bank as they decide to loan money. Makes all credit card lenders out to be predatory/usury...glossing over the default issue that prosper lenders will have to face as well. "An A rated loan have a 2.5% default rate on average." Interviewer asks if a lender can ask Prosper to verify income. Chris does not answer the question. (Who would since their stats are so bad there too.) He goes on and on about the info posted on the listings and says any questions a lender has can be directed to the borrower.
Interview tried to ask about default rates. "We've changed a lot" "pre credit crisis" lenders getting -3% ROI during the crisis (yes, he admitted a negative) but hey, if they'd been in the stock market, it would have been more. Then he predicts that future loans should earn the lender +7%.
Then he brags about the new secondary market. Their requiring credit scores of 640 and systemically preventing low bids.
Interviewer asks when a lender in an unapproved state can dump their existing loans on this secondary market....
And, then too often, Chris keeps bragging about Americans borrowing from other Americans. And hey, be a bank, don't register on SEC, just dump a lot of money into Prosper.
MSNNBC interview... Chris tried to steer conversation to his you-be-the-banker model (even while knocking the banking industry). What if the borrower is a bad risk? We service the loan, we collect on the loan. One of the interviewers brings up the risk, Chris talks about $25 loan model (even equating it to securitizing a loan) and claims that you can easily diversify.
Wall Street Journal from July, 2009
For example, the average lender on Prosper since the company’s inception in 2006 has lost 3.67% after charge-offs, though many of the earliest lenders lost much more. Since March 2007–when the company began providing more information about borrowers’ credit and employment histories–average lenders’ returns were negative 2.04%.
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Topic: Washington Post claims 5% default rate on Prosper (Read 15685 times)