UPDATE: After a second reading I think my assumption about the secondary market is incorrect… (My own hopes for such a market might have clouded my vision.) It looks like LC is just registering for a license that they think they need to continue working with “lenders”: http://www.techcrunch.com/2008/04/08/lending-club-puts-moratorium-on-lending-activity/
I am leaving hte rest of my original post unchanged.
I received the following email from Lending Club…
Lending Club has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future. Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. We will continue to service all previously funded loans during this period, and lenders will be able to access their accounts, monitor their portfolios, and withdraw available funds without changes.
The borrowing side of our site will remain generally unaffected by this registration process; borrowers can continue to apply for loans and new loans posted after April 7, 2008, will be funded and held only by Lending Club.
Until the registration process is completed, the company will undergo a quiet period and will not be able to respond to press and other inquiries about Lending Club or the registration process during that time.
Q&A:
Q1. What about money I have begun moving, but is still in transit to Lending Club?
A1.1. If you are in the process of verifying your bank account, you will be able to complete that verification but will not be able to add new funds
A1.2 If you have initiated a transfer, the funds will be displayed in your Lending Club account balance as soon as those funds are available.
A1.3 If you have uncommitted funds, you may request that Lending Club return those funds via the same method used to load the funds. For example,
• If you have initiated an ACH to add funds, these funds will be transferred into your Lending Club account but you will not be able to lend these funds out. You can go into your Lending Club account once the ACH transfer has been completed and withdraw funds back into your linked bank account..
• If you’ve wired funds into your Lending Club account and have not yet committed these funds into loans, you can send a request to support@lendingclub.com for us to wire these funds back to you at no charge.
• If you’ve sent funds by check, and have not yet committed these funds into loans, you can send a request to support@lendingclub.com for us to send you a check by mail for the same amount at no charge.Q2. What about referrals?
A2.1 The current referral program is terminated. If you have referred someone who has already signed up as a lender or a borrower, or if you have been referred by someone and have already signed up as a lender or a borrower, you will be receiving your referral payment within the next few days.Sincerely,
Patrick Gannon
Senior Vice President
Lending Club
440 N Wolfe Road
Sunnyvale CA 94085
www.lendingclub.com
You can also read about it at their blog: Lending Club Goes Quiet…
Wow! So the lenders are no longer going to fund the loans.. Any approved borrower will be funded via LendingClub itself. And my least favorite part… the referral program was terminated.
How long will this take? My best wild ass guess 7 months to 1.5 years.
I guess I will be withdrawing my funds from Lending Club until this quiet period ends… Doesn’t look like I have much choice… First transfer initiated this morning: $45 some odd dollars.
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[...] credit: pfalaRateLadder wrote up an interesting piece – Big Lending Club News — Quiet Period Underway for Secondary Market – about an email he received from Lending Club about a major change in how they are going to go [...]
Looks like all you will be able to buy is a CD from now on, P to P is over on lending club.
It’s unclear, to me, what the motivation behind the change is. Is it that they’re going to be creating instruments that will be sold so that diversification is ‘built-in’ and playing more of a middle man (i.e. p2middleman2p) ? Or was this regulator prompted in that perhaps LendingClub was viewed as selling financial instruments for which they weren’t properly authorized ?
[...] Ladder mentions that he does not have much choice but to withdraw funds as they become available. He also lamented the closing of the referral program which I can understand if you see his screen [...]
[...] April 2008 — (2.6%) to 14.37%Vintage Curves 04 2008 — Amount Late By Credit Grade from OriginationBig Lending Club News — Quiet Period Underway for Secondary MarketLending Club on ABC NewsProsper Released the Market Survey Results for March 2008 Lending Club [...]
[...] Ladder updated his posting on the quiet period notice to say that he no longer thinks that the filing is to create a secondary market. He based this [...]
[...] Big Lending Club News — Quiet Period Underway for Secondary MarketVintage Curves 04 2008 — Amount Late By Credit Grade from OriginationRateLadder IRR/ROI Update April 2008 — (2.6%) to 14.37%The WealthBoy Strict ROI for Prosper LendersLending Club RecharicterzationProsper Released the Market Survey Results for March 2008 Lending Club on ABC NewsThe Webby Nominees Are AnnouncedQuicken ROI Update = 8.99%Prosper Site Update — Nationwide 36% Except Texas and South Dakota [...]
If LendingClub is funding their own loans in house, this brings up the question, how do they decide which loans get funded ? It’s not by auction process, since there are no lenders, so how do they decide ?
[...] Big Lending Club News — Quiet Period Underway for Secondary MarketThe WealthBoy Strict ROI for Prosper LendersVintage Curves 04 2008 — Amount Late By Credit Grade from OriginationRateLadder IRR/ROI Update April 2008 — (2.6%) to 14.37%Prosper Site Update — Nationwide 36% Except Texas and South DakotaQuicken ROI Update = 8.99%Lending Club RecharicterzationLending Club on ABC NewsThe Webby Nominees Are AnnouncedProsper Released the Market Survey Results for March 2008 [...]
[...] Big Lending Club News — Quiet Period Underway for Secondary MarketThe WealthBoy Strict ROI for Prosper LendersProsper Site Update — Nationwide 36% Except Texas and South DakotaVintage Curves 04 2008 — Amount Late By Credit Grade from OriginationQuicken ROI Update = 8.99%Loanio in “Final Pre-Beta Testing”RateLadder IRR/ROI Update April 2008 — (2.6%) to 14.37%RateLadder Lending Club UpdateLending Club RecharicterzationLending Club on ABC News [...]
I think you’re all missing the point…
I suspect the point here is to enable people to trade their owned debts like securities. This would provide some liquidity to lenders.
IOW, if I have $50k to invest and I put it into Lending Club loans, but six months later I find a need $40k back, what can I do? Nothing, right now.
But if those loans held could be sold to others, I can pull my money out.
I think that’s the end goal… but in the interim, they have a hold on taking new deposits from lenders. To keep the borrowing side of the business open, they’re funding the loans themselves. It’s a temporary situation until registration is completed.
That’s my speculation, anyway.
@eee
maybe… but Prosper did not go into a quiet and they are registering with the SEC in order to do the same thing…
http://www.rateladder.com/2007/10/30/prosper-files-s1-with-sec/
[...] Webby in Banking / Bill Paying (Mint was People’s Choice). Lending Club is currently in a quiet period and is not currently accepting new commitments from lenders or allowing new members to register as [...]
[...] continues the Lending Club quiet period started on 4/8/2008. Originally I had guessed 7 months to 1.5 years for the Lending Club quiet [...]
[...] it has taken me this long to cover the update, but I have been busy at work and frankly without lenders having the ability to lend money I was lacking motivation. Well I got to it this weekend and so I thought I would give a quick [...]
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