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[bamalucky]

Wiseclerk & Zopa CEO spank Prosper in the comments here.

http://blogs.reuters.com/felix-salmon/2010/01/19/the-problem-with-peer-to-peer-lending/

The best thing of all though is the pathetic Prosper reply on their blog

[NewHorizon]

This quote is at the bottom of http://www.americanbanker.com/bankthink/peer_to_peer_lending-1006303-1.html :

[Felix] Salmon cites an email from Gimein, who wrote: “I’ve cut up Prosper numbers in a bunch of ways, and one thing I’ve noticed is that some of the worst returns come from folks with okay credit who are willing to pay very high interest rate: they’re willing to pay a lot because their finances are in worse shape than they seem.”

True true.  (And how much of this is thanks to the forums at creditboards.com?)

Well meanwhile, this sure doesn't sound like Mr. Gimein is contemplating retracting his piece any time soon.

[xraider]

Gee, I'd be quaking in my boots right now.

Prosper's lawyer threat to prosperreport.com was effective.  Prosper's defense of the class action appears equally effective.  Let's see what else they try. 

In terms of defamation, truth is a defense.  I'd be more than happy to talk to any reporter, and provide them with lots of source materials.  I'd start with the 2007 changes to the terms of service, initially implemented with no notice to anyone, and have lots more to discuss from there.

[GLeaderAccountantsChoice]

Thanks bama:


http://blogs.reuters.com/felix-salmon/2010/01/19/the-problem-with-peer-to-peer-lending/


Very interesting article and responses from Lending club and Prosper. I think Renaud from Lending Club is right to stress the importance of underwriting in reducing credit losses by minimising the adverse selection you correctly identify. This is something we take even further at Zopa in the UK and has resulted in losses to date of less than 1% (and therefore very postive returns for lenders) since we started this whole P2P lending thing in March 2005.

It’s actually as much of a marketing challenge as a credit one as it’s obviously cheaper not attracting the wrong sort of people in the first place than having to decline them later!

What I think it means is that P2P lenders have to apply the same disciplines to lending as conventional lenders and I don’t know too many successful ones of them who simply rely on credit scores. I think it also goes to show that individuals aren’t able to make such effective credit decisions on their own, both because they don’t have all the required information to be able to do so, and because they are too easily influenced by “emotional” factors that have no relation to credit risk. I also believe that P2P lenders can benefit from the more “social” side as our experience has shown that responsible borrowers are more likely to repay us than other financial institutions as long as we get the basics right. This is suggested by our credit losses being lower, as far as I know, than any other financial institution in the UK.

Giles
Co-founder and CEO, Zopa

[christoofar215]

Wow the bad press is just amplifying now since that article.   Reuters?   I'm sure the next will be WSJ and then it's all over.

[christoofar215]

Look at the 2nd link

http://www.google.com/#hl=en&source=hp&q=Prosper.com&aq=f&aql=&aqi=n1g10&oq=&fp=292ac4760832f3c4

[DakotahFury]

Look at the 2nd link

http://www.google.com/#hl=en&source=hp&q=Prosper.com&aq=f&aql=&aqi=n1g10&oq=&fp=292ac4760832f3c4

Not only that, but the top "sponsored link" I show is Fred's blog. 

[112233]

did prosper miss the point in Paul Levy's letter about "more attention to the criticisms" ?

[yankeefan]

Look at the 2nd link

http://www.google.com/#hl=en&source=hp&q=Prosper.com&aq=f&aql=&aqi=n1g10&oq=&fp=292ac4760832f3c4

He did this counterpoint the next day.

http://www.finance-weblog.com/50226711/counterpoint_why_prospercom_will_succeed.php

Unfortunately, items 2 and 3 in the "Why it will succeed" weren't really there.

[Fred93]

Gimein responds to prosper's objections.  Holds his ground.  Good job. 

http://www.thebigmoney.com/blogs/sausage/2010/01/22/exchange-prospercom

[Mtnchick]

Gimein responds to prosper's objections.  Holds his ground.  Good job. 

http://www.thebigmoney.com/blogs/sausage/2010/01/22/exchange-prospercom

Awesome response

[onthefence]

http://www.thebigmoney.com/blogs/sausage/2010/01/22/exchange-prospercom?page=0,3

All that said, I do agree with Prosper that the best way for lenders to judge Prosper's performance is to look at the actual (not merely estimated) returns on loans that have already been made. Every way that Prosper can find to characterize loans going back to the inception of the site shows a loss for investors. If Prosper would like post those numbers prominently on its home page next to—or instead of—the 6 percent to 14percent annual returns that it now leads lenders to expect, that might give investors a better idea of what they are signing up for.

[Urbi_et_Orbi]

Prosper is incredibly stupid to continue to draw so much attention to this piece, considering their argument only serves to make them look worse.

Then again, I don't think anyone here minds.

Mr. Gimein is doing potential investors a HUGE favor by inserting some truth into the mainstream discussion.

[Urbi_et_Orbi]

I'd also like to point out a fundamental difference between Prosper and TheBigMoney...

When Prosper questions something TheBigMoney published, TheBigMoney reproduced the criticism and provided a response from the responsible person.

When anyone questions Prosper, the item is rarely (if ever) published, a comment is quickly deleted and the questioners are routinely suspended or banned from the platform.

[Capital_Finance_Group]

Gimein responds to prosper's objections.  Holds his ground.  Good job. 

http://www.thebigmoney.com/blogs/sausage/2010/01/22/exchange-prospercom

Awesome response

+1