Comments

The one thing that strikes me right away: fairness in lending. The Internet is superb at putting everyone on an even footing. Many pre-conceived notions will be avoided; everyone will be required to submit the same documents without the element of the too often initial discriminative face to face practices.

There is also something super about the anonymity of buying on eBay where the focus is the product (price and condition) and not the seller and where everyday people are empowered. I could care less who's selling the product. My interest is the product only. Maybe this disruption will bring fairness and greater revenue, creating a win win for all.

Posted by Judith Ellis at February 1, 2008 12:43 PM

Interesting times, Val. There are many arguing for a return to more government regulation of the loan industry in general. Which way is the pendulum swinging?

Posted by John O'Leary at February 3, 2008 11:52 PM

Judith - I have to pick up your point about not caring for the other party's identity, just the product. Would you be happy to buy from someone with an eBay rating of less than 90% or to sell to someone with 4 non-payment strikes in the last month? And if you were putting the money up in this way, would you be happy to lend someone $100k on the basis of an internet appeal?

I think the important thing is that you do have some guarantee about the other party's trading status. There's a clear risk that a relatively anonymous method like the internet will attract fraudsters, both lenders and borrowers, money launders, terrorists etc. Whatever you think of eBay, it does have some legal status (however hard to enforce) and it has its own internal checks and controls.

Posted by Mark JF at February 4, 2008 7:32 AM

Mark JF- The identity that you reference is that it would not matter if Bank Q or Bank Z was selling me the product so as long as I can research pertinent information relative to their business, products and practices, including past history. My belief is that lending institutions tend to think that the power is in their hands, when, in fact, such an institution is predicated upon the needs of the client. There is a certain arrogance inherent in lending that I was addressing.

There was distinction made regarding quality that has little to do with who's selling the product. This is the "condition" about which I wrote. If trading status on sites such as eBay was not guaranteed with built in quality measures there would be more concern. Ebay may be winning this battle with the great leadership of Meg Whitman. Even with such quality measures in place, I'm sure there are cracks.

But there are many cracks in our lending systems. This is largely the reason for our current whole subprime mortgage mess. We agree on quality. What I do not particularly care about is the seller so as long as I can do my own thorough research. If the brand matches the quality. I'm gammed. If not, I'm out.

My sense of rah rah came from putting the power in the hands of the people, by allowing them to choose which institution best suits their current need without the initial face to face meeting. (Many go into lending institutions with a hope and a prayer that they will be given proper consideration--all things being equal-- because of "pigmentary persuasion." This is a new term introduced by Dave Wheeler :-)) The idea generated interest for me from a sense of fairness that the Internet might employ.

Safety measures on both sides should, needless to say, be a part of any consideration.

Posted by Judith Ellis at February 5, 2008 12:42 PM