Lending Club recently sent an email to, presumably, all of the lenders, effectively closing their doors indefinitely. For those of you who may not have received the email here are the highlights.
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.
Notice no date, expected date, or estimated date for completion.
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.
Thanks for the notice, Lending Club! The time stamp on this email is 11:55 pm on April 7th. Had I noticed the email sooner, I would have had five minutes to invest money in my account. It also appears, at least for the time being, that Lending club is no longer a Peer-to-peer (P2P) lender.
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.
Not only are the referrals gone, but this language doesn’t make it seem likely that they will return.
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.
Given the information available in this email, it may be a few days or months, who knows. It’s so unfortunate. I really liked Lending Club. I liked it far more than any of the other P2P sites currently available, but this sudden change without notice is more than a little disconcerting.
If Lending Club does decide to return to normal operations, it will not be an easy choice to return. I guess now we will just have to wait and see.
This post is tagged Investing, lending, lending club, p2p Lending, Saving
16 Comments
Hey there!! Yeah Lending Club sent that weird little email to me as well, around the same time that you got yours. April 7th around midnight or so. What a fine time for them to send a damn email! Half the world is asleep around that time! I’m guessing that somehow the mismanagement and the poor ass economy led to them going belly up on all the lenders. Sucks totally. I emailed Lending club at two different emails and no answer from either. I called the long distance number to their main office, and some dumb secretary answered me and said she’d take my number and have someone call me back. No one has called. I gave up. I went to Better Business Bureaus site and filed a complaint against them. Since I had $775 tied up in four loans, and havent received the first loan payment from any of them, Lending Club can just refund my money and assume the loans to those four people like they told us they would in the email. They haven’t heard the last from me. If I don’t get my money refunded, I’ll seek the help of the FTC as well. We WILL come to a resolution!!
Steve, The whole point of a quiet period is that they can’t answer you or any one else. If they do, they could get in big trouble with the SEC. And what what difference did it make what time they sent the email? It was still an immediate action regardless of what time it came.
The email said that you could withdraw your money that was not tied up in loans. You can’t pull out money that is already in loans. The loans are still good. People must still pay them. This change may actually make your loans more valuable if Lending Club succeeds in creating a secondary market.
By the way, rather than going “belly up”, they actually were doing really well. See Netbanker’s article on loan volume.
I must agree with Jason though that the communication could have been much better. Unfortunately, they can’t fix that now due to the quiet period and we will only be left with people’s wild speculations for now. I posted a roundup of comments on the Lending Club Quiet Period email including a link back to this article.
@JasonCrews:
I can’t comment on many of your especulative assertions, but I can certainly tell you we are intending to return to opearations and relaunch the referral program as soon as we are out of the quiet period. Thanks for being an advocate of the concept so far, and for referring some folks our way.
@Steve:
I will be calling you today. I have your contact information. Please drop me a line at rob [at sign] lendingclub [dot character] com with a time that is good for you.
Best regards,
Rob from Lending Club
Steve,
I really don’t think they are going belly up. I just don’t think they handled the announcement very well, but who knows, maybe they were required to go that route. Mostly I wish they would have, or could have, given us some idea of a time frame. I think that alone would have freaked people out allot less.
Rob,
No worries, as long as you come out of this with the same great service I’m sure their won’t be any problems.
@Steve
I have attempted to call the only “Steve” on my list of lenders who contacted our member support without luck.
Please contact us with your information and best time to call you at support@lendingclub.com, and mention the Amatureist Financial Journey blog.
Thanks
Rob from Lending Club
Want to know what is going on? Here is some speculation from around the web:
It looks like Lending Club’s buisness model is a little different from some of the other P2P lending sites. They not only match lenders with borrowers and service loans, they also fund loans themselves. I’m not SEC lawyer, but the authorities seem to consider Lending Club as issuing securities, which requires special license.
Keep in mind, until Lending Club comes out with some official statement, this is all speculation.
A number of blogs are picking up on this at the moment and it appears to have caused major inconvienience in the blogsphere! I wonder if it is just a cheap marketing trick to get more people to invest? We’ll find out soon enough
Steve -
I expect Lending Club to be back bigger and badder once they sort out any legal issues and expansion plans. As a borrower, I found Lending Club to be the easiest and more effective way to get a P2P loan. The only “competitor” left - IMHO - is prosper. There seems to be several sites about to go live, but still nothing that can be depended on like Prosper.
While Lending Club is in hibernation, take a look at Prosper again.
All I can say is, I hope so. I really liked them.
I’ve just signup on prosper, but I think they might be going the same route as lending club.
The bidding process only helps borrowers. Because most lenders aren’t professionals, they keep driving rates down in a bidding war (kinda like ebay).
Rates eventually become much lower than it’s supposed to be (given risk)
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