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Author Topic: Lending Club Loan Demand

r
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Lending Club Loan Demand
OP: June 09, 2016, 11:00:00 PM
Did this get posted? LC is already using their cash for loans.

http://www.wsj.com/articles/new-lendingclub-mistake-shows-loan-demand-issues-persist-1465565247

The new filing showed that LendingClub had bought $7.2 million worth of the notes itself in the period that was revised in May, the first time that LendingClub has held on to loans rather than immediately selling them to investors.


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j
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Lending Club Loan Demand
#1: June 09, 2016, 11:00:00 PM
That's rather disheartening to read, even if they only intend to hold the loans for 30 days.
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S
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Lending Club Loan Demand
#2: June 09, 2016, 11:00:00 PM
Aarti Shahani over at NPR doesn't seem to think this is bad. In fact this is one of the two take-aways that he emphasizes should come from the LC fall-out:

http://www.npr.org/sections/alltechconsidered/2016/06/10/481474919/with-lending-club-disgraced-an-industry-looks-for-lessons

From the article:

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T
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Lending Club Loan Demand
#3: June 09, 2016, 11:00:00 PM
Buying loans reduces cash, which is what standing between LC and an inability to continue to fund their operation. It also adds credit risk and potential moral hazard to the system. If they have to fund those mailings, this is probably the short term solution until they get back in equilibrium

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f
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m
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Lending Club Loan Demand
#7: June 09, 2016, 11:00:00 PM
I will chime in that it's a bad idea for LC to buy and hold notes.  If they're holding notes for 30 days or whatever as inventory so that they can sell a bundle of notes to an investor, then maybe that's ok. 

Like I said before, with LC's cost of capital probably in the teens or higher, they have no business whatsoever investing their cash in notes that earn 7-8%.  Period, end of story. 
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T
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Lending Club Loan Demand
#8: June 09, 2016, 11:00:00 PM
Do they even have a true cost of capital? Their stock has been down since the IPO so there is no empirical  way to determine the cost of capital.

from: mchu168 on June 10, 2016, 04:51:42 PM
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r
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Lending Club Loan Demand
#9: June 09, 2016, 11:00:00 PM
don't the notes beat the return on cash on the balance sheet?

the reason why they have so much cash is that investors at the IPO overpaid.
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R
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Lending Club Loan Demand
#10: June 09, 2016, 11:00:00 PM
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b
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T
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F
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T
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Lending Club Loan Demand
#14: June 10, 2016, 11:00:00 PM
I don't understand the article.
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