Earlier posts addressed peer-to-peer currency and crowd-sourcing, each a form of populist finance that takes distintermediation to a new level. But both were preceded by peer-to-peer lending, where small business wannabes post requests for funding online, and individuals loan them from $25 to $1,000. A few of the most popular sites are prosper.com, lendingclub.com and zopa.com. Earlier this month, Prosper announced a $17 million investment by a group of investors that included Google’s Eric Schmidt.
The industry was briefly shut down a couple of years ago by the SEC, but has managed to generate more than $500 million in loans over the last five years (WSJ subscription req’d). How are peer-to-peer lenders regulated and what changes should be made, if any? If a single website managed a private currency and operated crowd-sourcing and PTP lending markets, would it be a country?