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What happened? Why is lendingclub doing bad? From the outside it looks like a good business model. One that should do better I thought.
by yalogin 11y ago
What happened? Why is lendingclub doing bad? From the outside it looks like a good business model. One that should do better I thought.
- phamilton 11y agoLending club is an experiment that had never been tested in anything but a booming economy with near zero interest rates. Any change in those circumstances is an unknown.
- partytran 11y ago> a booming economy This seems to be a bit of hyperbole; I disagree that the economic consensus is that the period of LC's existence has been an economic boom. U.S. stock and housing prices indeed recovered from 2008 lows - real economic growth (jobs, industrial output, new home construction) has been tepid at best. The Bay Area may have been flooded with new jobs and investment, but the rest of the country certainly has not been.
- joosters 11y agoIt's a good business model for Lending Club, but maybe not for investors. LC is responsible for grading the loans and calculating the risk of each borrower. However, it does not take any of the risk of the loans being traded on its platform. So there's a big concern that LC may not be very scrupulous about the borrowers it accepts. It's a similar situation to the last financial crisis where companies were happily accepting risky mortgage applications, doing little or no checking, and then selling them on for a quick profit.