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How Can You Go From Hero To Zero In A Matter Of Months?

A report from The Times of London in the UK. “A week before the collapse of Lendy, the chief executive of Barclays business banking gave a warning of what might be in store for peer-to-peer lending. Platforms linking ordinary investors and business borrowers were exposing people to poor-quality debts, Ian Rand, 49, said. There were, he added, ‘a lot of people that banks wouldn’t lend to who went to Wonga instead. That didn’t work out too well for them or for Wonga. I am nervous that we could be going down the same path with business lending.'”

“His comments, made in an interview with a business website on May 16, turned out to be prescient. About 22,000 investors are now nervously awaiting news of how much of the more than £160 million of their money might be recovered after the Lendy collapse.”

“Not that it was much of a surprise for those investors who had closely followed events in recent months. Like watching a ‘slow-motion car crash’ is how one described the insolvency of a business that has been plagued by late-paying borrowers.”

“For most of its existence it has been dogged by questions over the quality of its borrowers, how it handles defaults and the quality of its management. Prospective investors were told that they could invest ‘with complete peace of mind.’ While more realistic risk warnings appeared eventually, investors were reassured that ‘lending is always secured with a legal charge and our loan amounts do not exceed 70 per cent of the open market value.'”

“When loans went bad, these valuations sometimes turned out to be wildly optimistic. By November last year about 60 per cent of its loan book had fallen behind on repayments. Investors should brace themselves for a significant hit.”

“Andrea Hall is one of the thousands of investors waiting to see how much money might be salvaged from the collapse of Lendy. The marketing consultant from Reading invested £10,000 in July last year. ‘I’d sold a property in Spain because of Brexit and wanted to reinvest the money,’ she said.”

“She was attracted to Lendy, which is not covered by the scheme that guarantees up to £85,000 of deposits. Ms Hall, 54, said that she had been reassured by Lendy’s website. ‘They basically said, ‘Don’t worry, if they can’t repay we’ve got the property.'”

“She spread her money across ten loans. By the start of this year, only two were performing safely within terms. She withdrew as much as she could — about £1,000 — but said that she relaxed a little when Liam Brooke, Lendy’s founder and chief executive, wrote to investors at the end of March. He acknowledged a ‘significant rise in borrower defaults,’ but said that ‘the business is in a more robust position than it has been’ and that governance, financial controls, liquidity, compliance and recoveries were being strengthened.”

“Ms Hall said: ‘I thought, ‘I don’t need to worry about this.’ Now I’m thinking, ‘How can you go from hero to zero in a matter of months?'”

This Post Has 41 Comments
  1. ‘said that she had been reassured by Lendy’s website’

    Oh, well, it’s fine then. They had a website!

    1. He acknowledged a ‘significant rise in borrower defaults,’ but said that ‘the business is in a more robust position than it has been’ and that governance, financial controls, liquidity, compliance and recoveries were being strengthened.”

      She didn’t see that as a huge red flag? The stupid, it burns.

  2. About 22,000 investors are now nervously awaiting news of how much of the more than £160 million of their money might be recovered after the Lendy collapse.”

    BWHAHAHAAHAAHAAAA! Those aren’t “investors” – they’re greedy yield-seeking fools who are now bagholders.

  3. “Ms Hall said: ‘I thought, ‘I don’t need to worry about this.’ Now I’m thinking, ‘How can you go from hero to zero in a matter of months?’”

    When confronted by such vexing questions, Ms. Hall, as well as the loss of your “investment,” your best and only recourse is to stamp your little feet.

  4. it all comes back to fake valuations ….
    so if London property inflated 100% – what happens when it comes back to the old trajectory

    ——————-
    While more realistic risk warnings appeared eventually, investors were reassured that ‘lending is always secured with a legal charge and our loan amounts do not exceed 70 per cent of the open market value.

      1. I invested a 6-figure amount in Lending Club and Prosper. I did a deep dive into loan selection and credit worthiness and would comb over algorithms looking for the secret sauce. I had all sorts of criteria around what professions to avoid, states to avoid, loan categories to avoid, etc. The first few years I had returns of around 11%. Then it dipped to about 7-8%. I’m at the tail end of this experiment and have less than $10k invested. I think the lifetime return has been about 6.4%. The returns really started to tank a couple of years ago when Goldman Sachs entered the arena with Marcus and when Rennault LaPlanche was ousted from Lending Club. I still fundamentally believe in the story, but the whole idea of peer-to-peer lending has been co-opted. It’s all institutional money and big hedge funds now.

  5. Sure, its all legit – “A [28 yr old] Chinese blockchain entrepreneur won Warren Buffett’s charity lunch with $4.6M bid”

    1. Oops …

      “A Beverly Hills estate previously owned by Brad Pitt and Jennifer Aniston is for sale for $49 million. Pitt and Aniston, who were married from 2000 to 2005, purchased the home in 2001 for $13.5 million, according to The Wall Street Journal. Pitt and Aniston sold the home in 2006 to hedge fund executive Jonathan Brooks, who is the current owner.”

    2. Good lord, who designed that house? A three-year-old? A dart-board?

      I’d much rather have that European Tudor-ish mansion in Asheville.

    3. “Does that look like a $50 million dollars kitchen to you?”

      That kitchen makes me dizzy.

  6. Sometimes when I’m in the downtown of a big city, I look up at the skyscrapers and wonder what’s happening on the other side of those shiny windows. Well, it appears to be shady shenanigans, garden variety cheating, getting people addicted (FB), tricking people out of their money, buying off governments, stacking pyramid schemes, general swindling, etc. Do these folks KNOW they are screwing everyone over? Or do they think that they are in the right? It’s like real-life Mad Men, only much worse.

    1. LOLZ if you looked up and saw me “working” as a federal contractor (back when Obummer was still in office) I was probably playing Angry Birds on my phone.

      In case anybody forgot (and it’s been a while since I posted this), federal government contractors cost taxpayers over $500,000,000,000 a year. That’s over half a trillion dollars.

      It is much, much, much worse than most people will ever know…

      1. I used to be in IT and had lots of gov agencies as clients. They work at 30% what small business owners do. Most of it is online shopping and vacation planning. CalTrans workers in CA hold 2nd jobs they do at work.

      2. The government contractors are bound by rules in the contracts to hire a percentage of the dullest losers from the indigenous population, and then they have to provide accommodation when the neurosis surface.

  7. From the previous thread:

    “According to her, ‘The best way to get $100,000 over three years in Denver is to purchase a home. It’s much easier than trying to save $100,000. You win with tax benefits and you win by gaining equity, which is the same as net worth.’”

    Denver = CRATER.

    Follow that REALTORbabble horsesh*t advice, and you deserve everything you’ve got coming, especially the millennials who think getting likes on Instagram for posting pictures of your newly-purchased, depreciating shack, is justification for your financial suicide.

    1. Awful. She was pinned for ten minutes and her pelvis crushed. Hey Elon, I’ll leak you some technology. No driver sitting in the seat, no driving. My lawnmower has this feature.

      Tesla won’t release the black box data: Priceless.

      1. It’s not like the Tesla drove itself. A child snuck back into the car and pressed the pedal.

        1. It’s not like the Tesla drove itself

          Even a farm tractor wouldn’t do this. If your fat azz wasn’t in the seat a lawn mower wouldn’t do this. It’s a learning curve and you’re not on it.

        2. Probably some underwater FB looking to make some credit card and mortgage loan payments. When I was two I fell off my bike and broke my wrist. Should my parents have sued the bike manufacturer? No, and not to dismiss the unfortunate event (glad her and her baby are ok) that took place here but there are way to many people thinking they can put there hands out for easy money.

          1. Probably some underwater FB

            Santa Barbara resident who can afford a Model X?! I suggest you read the complaint.

    2. I’m glad baby and mom are okay. Seems a bit odd the family is suing the automaker when it was their two-year-old that hit the pedal and drove the car.

        1. Sure looks like fun flooring the pedal, letting off, flooring. letting off… I do not like being on the highway with drivers this reckless. Video games on the control console and that fart noise app are priceless.

          The stock seems to be on a relentless path to zero though.

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