Person-to-person lending (a kind of microfinancing) has grown fast with the growth of the Internet.
Wikipedia defines it as lending that occurs directly between individuals ("peers") without the intermediation/participation of a traditional financial institution. Person-to-person lending appears in two primary variations: an "online marketplace" model and a "family and friend" model. In 2007 the volume in the USA was over 700 mio USD of outstanding loans with a projected growth to over 5000 mio USD in 2010. Zopa in the UK is the pioneer of webbased P2P-lending, others like Prosper in the USA have followed.
Seems like a great idea exploiting the potential of hyperconnectivity: the costs of connecting lender and borrower are extemely low, the lender receives a high interest rate, the transaction volume can be very high, risks are spread. Especially in these days where traditional financial instutions have abused the trust placed in them, where regulators and credit raters have failed to do their tasks, and where credit is hard to get.
That's probably why the Security Exchange Commission has ordered Prosper to "cease-and-desist". Their crime is that they should have gotten a specific license according to the SEC.
Right, just what your country needs in these troubled times, protection from lenders.
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