Peer to Peer Lending Disappointment

No, it's not with the interest rate or that someone defaulted on me.

My disappointment is with Lending Club and their recent announcement:

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.

Why is that disappointing? Because it is no longer peer-to-peer lending.

The whole idea behind P2P Lending is to keep the banks out of it. People would arrange with other people to borrow and lend money, and the borrowers were responsible to the lenders. Now at Lending Club "lenders" will ensure the funding is provided, then the loans will be sold off to some institution and the borrower will have to deal with that while the lender most certainly will not receive the full amount they would have had the loan been paid directly to them.

It destroys the whole "community" aspect of P2P lending, and I am very disappointed.

Here is the main body of the email they sent:

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. We will continue to service all previously funded loans during this period, and lenders will be able to access their accounts, monitor their portfolios, and withdraw available funds without changes.
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.

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.