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P2P Borrower Clears Debt Fast
Topic Started: 29 Aug 2015, 02:00 PM (1,281 Views)
Terry
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peter fraser
29 Aug 2015, 04:30 PM
Actually they aren't backed by the taxpayer. If a bank experiences substantial losses, then once the capital backing that the shareholder have in reserve is used up, the bank is lost. The government may choose to nationalise it to save the depositors who in many countries have a deposit guarantee, but that's a decision for the government of the day on that day.

But the shareholders are lost either way.

Customers are prioritising the repayment of debt right now, but if in aggregate they repay debts faster than new loans are taken out the country will plunge into recession, and the accumulation of money to enable them to repay debts is difficult - in aggregate of course. There are always individuals who are able to buck the trend.
They are backed the taxpayer as all resources used to ensure the banking system is integrated with the political and legislative framework is paid for by the taxpayer. Even deposits in banks are protected by the taxpayer to some extent. With the P2P lending, 100% of the risk is taken by the lender.
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Loki
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peter fraser
29 Aug 2015, 02:17 PM
That's because for you it's a hobby, but a bank has a constant stream of borrowers and a processing system and staff to keep the lending stream running constantly.

If someone pays a loan back to a bank it's hardly a problem, the wheels keep on turning.
No more prepayment risk! Bank treasury departments must be pleased.


“Talk sense to a fool and he calls you foolish.” - Euripides
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peter fraser
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Terry
29 Aug 2015, 05:25 PM
They are backed the taxpayer as all resources used to ensure the banking system is integrated with the political and legislative framework is paid for by the taxpayer. Even deposits in banks are protected by the taxpayer to some extent. With the P2P lending, 100% of the risk is taken by the lender.
The depositors represent a broad segment of the taxpayers, so it's counter productive economically and politically to not look after them. The banking system is critical to the economic health of the nation, so banks either get supported, or nationalised, but only to ensure the survival of the banking system which includes an all important clearance system.

P2P lenders like all lenders who don't hold a banking licence, take their chances. If they are good at what they do they will survive and profit, if not they will get crushed by the bad loans they write.

Any expressed market opinion is my own and is not to be taken as financial advice
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Trollie
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peter fraser
29 Aug 2015, 08:32 PM
P2P lenders like all lenders who don't hold a banking licence, take their chances. If they are good at what they do they will survive and profit, if not they will get crushed by the bad loans they write.
I'd say that's exactly how it should be.

I'd be interested in seeing how P2P lending goes in a high rate environment, say twice what we are at now.
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Terry
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peter fraser
29 Aug 2015, 08:32 PM
The depositors represent a broad segment of the taxpayers, so it's counter productive economically and politically to not look after them. The banking system is critical to the economic health of the nation, so banks either get supported, or nationalised, but only to ensure the survival of the banking system which includes an all important clearance system.

P2P lenders like all lenders who don't hold a banking licence, take their chances. If they are good at what they do they will survive and profit, if not they will get crushed by the bad loans they write.
Well yeah, that's what I am saying. P2P platforms are simply a channel. Nothing more, nothing less. It allows individual lenders to take market share from the banks and it enables borrowers greater choice. Decentralizing control and access to credit are great things.
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peter fraser
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Terry
30 Aug 2015, 12:26 AM
Well yeah, that's what I am saying. P2P platforms are simply a channel. Nothing more, nothing less. It allows individual lenders to take market share from the banks and it enables borrowers greater choice. Decentralizing control and access to credit are great things.
I agree with that.
Any expressed market opinion is my own and is not to be taken as financial advice
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