Author Topic: The media really doesn't understand LC. Post your examples here  (Read 2278 times)

TheRobotsAreComing

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Hi Lend Academy - Post your examples of the media demonstrating how little they know about LC here. My two favorites are as follows:

The Motley Fool seems to think that LC doesn't provide enough information about the borrowers they underwrite...even though they are the first financial company I know of to actually publish all their loan level data.

      "The idea being that those computer algorithms are just as good, or better, than the traditional human underwriter that you would see at banks. Now, at traditional banks, that process doesn't just stop with that underwriter. Person applies for a loan in the branch, gets approved or not by an individual. If it's approved, that loan is later on, after the fact, reviewed by a loan review group that's traditionally housed in the credit department or loan administration department of these commercial and traditional banks. The problem that Lending Club is having right now is that their loan review process is, at best, weak, and at worst nonexistent."
Source: http://www.fool.com/investing/general/2016/05/18/its-a-tough-time-to-be-a-peer-to-peer-lender-and-i.aspx

The New York Times seems to think that LC is the first finance company to use automated underwriting models even though banks have been doing this for well over a decade.

      "Lacking, for example, is detailed data on Lending Club’s credit decisions and scoring models, its investors’ returns and loan performance."
      "Lending Club provides scant details on borrower performance by type, product or vintage (the year in which a loan was made)."

Source: http://www.nytimes.com/2016/05/15/business/lending-club-a-story-stock-that-skimped-on-the-details.html?_r=0

LC has some room for improvement. Creating a BRV to protect us investors is at the top of my list. But some of the news out there lately is just silly.
« Last Edit: May 18, 2016, 07:09:18 PM by TheRobotsAreComing »


fliphusker

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Re: The media really doesn't understand LC. Post your examples here
« Reply #2 on: May 18, 2016, 07:32:43 PM »
About that NY Times article: http://blog.lendingrobot.com/opinion/some-major-media-outlets-still-dont-get-peer-lending/

Good read, a lot better job then I did ripping the article the other day.  It is just plain poor journalism.  But readers are to fault for not doing any kind of fact checking and making their own decisions on a clearly biased article. 

TheRobotsAreComing

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Re: The media really doesn't understand LC. Post your examples here
« Reply #3 on: May 18, 2016, 07:36:11 PM »
About that NY Times article: http://blog.lendingrobot.com/opinion/some-major-media-outlets-still-dont-get-peer-lending/

What a pleasure to hear directly from you Mr. Marot ;)  ...  Thanks for writing such a great article. You should add something on today's Motley Fool article. Here is another gem that implies that P2P investing means investing all your savings in one borrower and praying. You would think that they would understand the concept of diversification. Its a legit alternative asset class with low correlation to stock market and 8 year track record of solid returns. Yes default rates will go up in a recession...but so do the bank's consumer loans. The S&P 500 might go down 50%, but historically consumer loan returns break even when a recession hits.

On the peer-to-peer side, where do those investors and those loans go after they take some pretty big losses? If you are used to a savings account or a CD where your money's there, backed by the FDIC, you put it into this loan with a 10% interest rate, and then suddenly that loan loses 50% of its principal balance, because the person just stops paying. Do you ever come back?
« Last Edit: May 18, 2016, 07:39:33 PM by TheRobotsAreComing »

HalfABubbleOff

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Re: The media really doesn't understand LC. Post your examples here
« Reply #4 on: May 19, 2016, 02:11:12 AM »
https://www.thestreet.com/story/13574808/1/jim-cramer-on-lendingclub-s-slippery-slope.html
"TheStreet's Jim Cramer says beleaguered LendingClub (LC)  is too risky and that investors should stay away from the stock.

"Lending Club is a company that we have disliked," Cramer, TheStreet's founder and manager of the Action Alerts PLUS portfolio said in an interview at the New York Stock Exchange."
and... "Cramer says the company has "accounting irregularities," that concern him, which would prompt him to sell the stock.
But it's not just because of LendingClub's recent problems. Cramer says he doesn't like alternative lending because he thinks "lending is harder than people realize."

However, last year... in April, Cramer had "answers to his questions".
https://www.thestreet.com/story/13082465/1/jim-cramers-top-takeaways-lendingclub-zillow-schlumberger-urban-outfitters.html
"Cramer said he was skeptical of LendingClub when it came public but now has answers to his questions. The stock has fallen to more attractive levels from its initial public offering price."