Interesting post by Prosper on their blog.
Prosper Blog | February 5th, 2010 at 12:34 pm
We maintain all lender funds in a separate account at Wells Fargo Bank “for the benefit of” our lenders. These funds are not commingled with any of our other assets. If we filed for bankruptcy, we don’t believe these funds would be subject to claims by our creditors.
Well maybe the funds would not, since they are held for the benefit of the lenders but interestingly enough they did not comment about the actual loans.
I had a supervisor at one time who worked out terribly. He would say something that sounded like he agreed with you so you would expect him to act on it, but when you carefully parsed out just exactly what he said, he promised nothing. The not knowing where he stood or even what the current priorities are made it difficult to work for him.
That blog excerpt sounds like the same technique: say something that sounds like our assets are safe, without really saying they are--as you indicated, the lack of mention about the loans. As far as I recall, very few people had questions about the FBO cash account, but big questions on the loans themselves. I know I had raised the question of ownership on the old loans, the agreement saying we own them (unlike the loans after the most recent reopening), but us basically not having any rights of ownership other than the cash stream. Now that we know that the SEC considered those loans unregistered securities, I think their standing is even murkier. As I mentioned before, I think it will take the bankruptcy judge handling Prosper's bankruptcy to make the final determination, and it is quite possible my last loan won't be concluded when (or if) Prosper goes bankrupt.