Of course the recession had a negative impact on prosper loan performance. If a person loses a job they will be less likely to pay back a loan, even a prosper loan.
"a negative impact"? Well it is hard to imagine a positive impact. Therefore it is easy to arm wave and make statements such as the above. However, this is a supposition, not an evidence-based conclusion.
Looking at the data, one doesn't see evidence that the economic conditions drove prosper default rates. That was my point. Those (and there have been many) who
excused prosper's bad performance because of the economy are full of baloney. If it were so, you would see it in the data.
I've got my own theory about why this is not so obvious in the charts. I think prosper had been making improvements and trying to reduce the number of fraudulent borrowers throughout the 1.0 years, especially in 2007 when how bad things were was becoming undeniably apparent to them. They probably weren't disclosing such info because they didn't want to admit how many fraudulent borrowers there were,
I'll buy the notion that fraud (interpreting that word broadly) had a large effect on prosper loan performance. Early prosper investors have tons of anecdotal evidence about fraud.
In summary I'm saying that the improvements that prosper made during the 1.0 years had a stronger effect on loan performance than the great recession did and this is why there SEEMS to be no correlation between prosper loan performance and the recession.
No question that many things were changing at once. Difficult to track trends and/or understand their causes when nothing holds constant.
For a prosper investor, this is an important area, but one that is difficult to know much about. Prosper keeps the information secret. We know they did really poorly in the past. It is difficult to find the words to describe how poorly they did. When lenders pointed out fraud, prosper attacked the lenders, etc. Now they are doing much better. What will they do tomorrow? Just because they have been doing better recently, are those controls still in place this afternoon? How would you know?