I would think that would've been an adverse selection issue.
I would probably tend to agree with the notion that flash-fund loans would represent more of an obvious adverse selection issue when co-mingled into a mixed population of loans. I do think the dynamic of the marketplace will change somewhat now.
I think there will be an incentive to quickly fund loans considered to be "viable" and, since listings end when fully funded, the money gets spread around faster for more loans. I also think some lenders, hesitant to place money on listings due to irrational bid-down, will now find the process more appealing. I suspect the marketplace now has the potential to become more appealing to institutional lenders or large individual lenders, allowing quick take-downs of the best loans.
The downside, of course, is that we have now moved as far away from the original idea of Prosper as possible, without actually referring to it as a bank. I also think smaller lenders will now have less potential upside.
I would not be surprised to see originations quickly jump to $4-5 million per month.
The idea of Prosper, as conceived by Larsen and Witchel, is now officially dead. At this point, they really need to re-write their tired old marketing materials.