Peer-To-Peer Lending (P2P)

Remember The Barney Song? "I love you...you love me...we're a happy family..." Well, transplant that nightmare of a horror film into...banks. Lending.

That's what peer to peer lending is all about. It's not a monolithic, terrifying purple dinosaur with gout doing the lending, not one giant set of teats being sucked upon by the masses. Instead, Joe The Plumber loans dough to Bob The Baker. Stu loans to Buck. Bizzy loans to Tralvaz. The singular Bank-lender (hi, Wells, B of A, Fanny and Freddie, etc.) is the opposite of peer-to-peer lending. There, we have a single entity with a "hostile," or at least negotiated, semi-antagonistic, cold, inhuman relationship. If a debtor fails to pay the money they've promised to pay back, they're stickin' it to The Man. The bank neutrally goes through the pace to collect on behalf of its shareholders. It kicks people out of homes and sell the home to someone who won't renege on the promise to pay back.

But in a peer-to-peer lending situaiton, the relationships are different. First, there actually is one. That is, usually the lender and borrower know each other either directly or in a one-off relationship.

Uncle Harry's friend had a spare $20k to lend to you for that 3-year-old SUV. So if you renege, you not only screw the lender, but Uncle Harry as well. The result? Way fewer defaults. And when things get tough, the room or flex for a negotiated redo of the loan gets way easier. If peer-to-peer lending actually becomes a Thing, it's likely a problem for banks. But it also creates a kind of resentful social stigma between lender and borrower.

Hostility and angst and weird kinds of shame in a society that still shuns debt, even in the Western World. Remember what Shakespeare said about neither being a borrower nor a lender? But what'd he know? He died bankrupt.