Title:
Post by: LonghornSF on May 17, 2016, 11:00:00 PM
Post by: LonghornSF on May 17, 2016, 11:00:00 PM
Just received this in my inbox:
Quote
Quote
Title:
Post by: PhilGD on May 17, 2016, 11:00:00 PM
Post by: PhilGD on May 17, 2016, 11:00:00 PM
I seem to remember this forum complaining about the lack of communication from LC during the past week and a half. And now that they're finally reaching out, they're "desperate for funding?"
I get that we have cause for being concerned, but I really don't think it's time to get out the pitchforks.
I get that we have cause for being concerned, but I really don't think it's time to get out the pitchforks.
Title:
Post by: rawraw on May 17, 2016, 11:00:00 PM
Post by: rawraw on May 17, 2016, 11:00:00 PM
I hope everyone on this forum reaches out and includes the three letters BRV in their reply.
Sent from my SAMSUNG-SM-G935A using Tapatalk
Sent from my SAMSUNG-SM-G935A using Tapatalk
Title:
Post by: sommers on May 17, 2016, 11:00:00 PM
Post by: sommers on May 17, 2016, 11:00:00 PM
I haven't gotten any email
Title:
Post by: McLu on May 17, 2016, 11:00:00 PM
Post by: McLu on May 17, 2016, 11:00:00 PM
Here are concerns and suggestions I sent to LC. Comments are welcome:
--
How Lending Club can win back the trust of investors
The original peer-to-peer (P2P) business model is still the future. Investors receive an alternative asset class that generally will have lower correlation with stocks and high returns. Borrowers receive credit at lower rates than a traditional credit card or access to credit they previously didn't have. This is as true today as it was before Renaud Laplanche, CEO and Founder of LC, resigned on Monday.
The underlying challenges primarily focus on how to expand this winning business model in a manner that is sustainable, grows the trust of both stock holders and retail loan investors, grows the trust and appreciation of borrowers across risk grades, and convinces regulators and the public more generally that LC is a win-win for all parties involved.
Management needs to act quickly to repair the trust of investors. The secondary market has grown from 300,000 to 520,000 since Monday. Great loans have decreased in price through the week and are now selling at discounts of 2-4%. Why would an invest purchase a loan at par on the primary market when they can get the same loan at a discount with 12 months of perfect performance? The underlying credit risk of these loans cannot justify these discounts. What has changed in the minds of investors is counterparty credit risk and liquidity risk. The risks that LC will not be around long enough to service the loans or that if they ever wanted to liquidate their loans they would take material losses relative to intrinsic value. What this means is that there has been a tremendous drop in demand from retail loan investors, the original P2P investor which justified the LC market cap of $10 Billion.
In my view, LC's management should consider the following nine steps to win back the trust of both stock investors and those investing in their loans. In short,
How to win back the trust of stock investors
1. Convince them that growth in loan originations going forward will be sustainable.
2. Segregate growth in loans that are potentially in violation of state Usury laws in financial statements.
3. Convince them that LC's underwriting model is consistent with Fair Lending laws.
4. Avoid deterioration in loan quality with more than just tighter underwriting standards.
5. Finally, stock investors will need to see LC win back the trust of retail investors.
How to win back the trust of retail loan investors
6. Reach out directly to P2P lenders via lending blogs like Lend Academy and address their concerns.
7. Construct a Bankruptcy Remote Vehicle (BRV) for all issued notes and more robust backup servicing.
8. Convince them that institutional investors and insiders will not receive preferential treatment over retail investors.
9. Show how loan performance would likely be affected by a recession.
Best regards,
LC stock and loan investor
--
How Lending Club can win back the trust of investors
The original peer-to-peer (P2P) business model is still the future. Investors receive an alternative asset class that generally will have lower correlation with stocks and high returns. Borrowers receive credit at lower rates than a traditional credit card or access to credit they previously didn't have. This is as true today as it was before Renaud Laplanche, CEO and Founder of LC, resigned on Monday.
The underlying challenges primarily focus on how to expand this winning business model in a manner that is sustainable, grows the trust of both stock holders and retail loan investors, grows the trust and appreciation of borrowers across risk grades, and convinces regulators and the public more generally that LC is a win-win for all parties involved.
Management needs to act quickly to repair the trust of investors. The secondary market has grown from 300,000 to 520,000 since Monday. Great loans have decreased in price through the week and are now selling at discounts of 2-4%. Why would an invest purchase a loan at par on the primary market when they can get the same loan at a discount with 12 months of perfect performance? The underlying credit risk of these loans cannot justify these discounts. What has changed in the minds of investors is counterparty credit risk and liquidity risk. The risks that LC will not be around long enough to service the loans or that if they ever wanted to liquidate their loans they would take material losses relative to intrinsic value. What this means is that there has been a tremendous drop in demand from retail loan investors, the original P2P investor which justified the LC market cap of $10 Billion.
In my view, LC's management should consider the following nine steps to win back the trust of both stock investors and those investing in their loans. In short,
How to win back the trust of stock investors
1. Convince them that growth in loan originations going forward will be sustainable.
2. Segregate growth in loans that are potentially in violation of state Usury laws in financial statements.
3. Convince them that LC's underwriting model is consistent with Fair Lending laws.
4. Avoid deterioration in loan quality with more than just tighter underwriting standards.
5. Finally, stock investors will need to see LC win back the trust of retail investors.
How to win back the trust of retail loan investors
6. Reach out directly to P2P lenders via lending blogs like Lend Academy and address their concerns.
7. Construct a Bankruptcy Remote Vehicle (BRV) for all issued notes and more robust backup servicing.
8. Convince them that institutional investors and insiders will not receive preferential treatment over retail investors.
9. Show how loan performance would likely be affected by a recession.
Best regards,
LC stock and loan investor
Title:
Post by: fliphusker on May 17, 2016, 11:00:00 PM
Post by: fliphusker on May 17, 2016, 11:00:00 PM
Title:
Post by: TravelingPennies on May 17, 2016, 11:00:00 PM
Post by: TravelingPennies on May 17, 2016, 11:00:00 PM
Title:
Post by: Fred93 on May 17, 2016, 11:00:00 PM
Post by: Fred93 on May 17, 2016, 11:00:00 PM
You guys... First folks blast LC because they are communicating inadequately. Then LC sends a letter, asking for comment, giving their address and phone number, attempting to open some communication. Now they are blasted as this is a sign of desperation. Really.
Communication is good.
Communication is good.
Title:
Post by: Peter on May 17, 2016, 11:00:00 PM
Post by: Peter on May 17, 2016, 11:00:00 PM
Title:
Post by: TravelingPennies on May 17, 2016, 11:00:00 PM
Post by: TravelingPennies on May 17, 2016, 11:00:00 PM
I just spoke with a member of the LC team. The individual was very interested in my suggestions.
This is your opportunity to help LC help you...I recommend that you take it!
This is your opportunity to help LC help you...I recommend that you take it!
Title:
Post by: TravelingPennies on May 17, 2016, 11:00:00 PM
Post by: TravelingPennies on May 17, 2016, 11:00:00 PM
Title:
Post by: RaymondG on May 17, 2016, 11:00:00 PM
Post by: RaymondG on May 17, 2016, 11:00:00 PM
Replied the email emphasizing the importance of BRV for me to continue buying the notes.
Title:
Post by: storm on May 18, 2016, 11:00:00 PM
Post by: storm on May 18, 2016, 11:00:00 PM
I received the e-mail for my IRA I opened a few months ago, but not for my 8-year-old taxable account. At any rate, I replied as well suggesting they implement a BRV. I'm seeing some deeper discounted notes on Folio too. Maybe LC will hear us.
Title:
Post by: dompazz on May 18, 2016, 11:00:00 PM
Post by: dompazz on May 18, 2016, 11:00:00 PM
I have not received the letter either.
Title:
Post by: Rob L on May 18, 2016, 11:00:00 PM
Post by: Rob L on May 18, 2016, 11:00:00 PM
Letter, what letter? 
(Sarcasm; lest you think otherwise I am aware of it and did not receive one).
(Sarcasm; lest you think otherwise I am aware of it and did not receive one).
Title:
Post by: nmay2k on May 18, 2016, 11:00:00 PM
Post by: nmay2k on May 18, 2016, 11:00:00 PM
Ironically I had emailed LC a question on 5/5 at 8 AM and got a call back from them same day that freaked me out. Got an email at 4 pm that they tried to call me to answer. I responded to them on 5/7 that they had not really answered the question and got a call from on 5/9 at 2:30 pm which really freaked me out...so I am guessing they are just being more responsive even though it seems freakish.
Title:
Post by: jheizer on May 18, 2016, 11:00:00 PM
Post by: jheizer on May 18, 2016, 11:00:00 PM
And I just had the Answer Your Questions email finally show up 15 minutes ago.
Title:
Post by: Peter on May 18, 2016, 11:00:00 PM
Post by: Peter on May 18, 2016, 11:00:00 PM
I note the perception/reality that LC's been so unresponsive to retail it now makes us think something is wrong if they deign to talk to us!
That says a lot... Glad they're talking (and maybe listening), though...
That says a lot... Glad they're talking (and maybe listening), though...
Title:
Post by: fliphusker on May 18, 2016, 11:00:00 PM
Post by: fliphusker on May 18, 2016, 11:00:00 PM
Title:
Post by: TravelingPennies on May 18, 2016, 11:00:00 PM
Post by: TravelingPennies on May 18, 2016, 11:00:00 PM
Title:
Post by: sommers on May 18, 2016, 11:00:00 PM
Post by: sommers on May 18, 2016, 11:00:00 PM
Title:
Post by: Rob L on May 18, 2016, 11:00:00 PM
Post by: Rob L on May 18, 2016, 11:00:00 PM
Title:
Post by: TravelingPennies on May 19, 2016, 11:00:00 PM
Post by: TravelingPennies on May 19, 2016, 11:00:00 PM
Title:
Post by: RaymondG on May 20, 2016, 11:00:00 PM
Post by: RaymondG on May 20, 2016, 11:00:00 PM
Title:
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Title:
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
I have been looking around folio (something I hate to do given my 1% return the last time I did) and there were some good old fashioned notes there at a 2% discount. So your time is probably more productive picking through folio than saving your cash for ~ 10 fractional loans coming out on the primary market that may match your loan subclass. I guess this is what they meant when they said they "may reduce loan volume". The part I don't get is if the borrower has not gone away, why not keep cranking the loans? I am guessing its not the recent events at LC management causing the "reduced volume" but something much bigger than them (the 1Q consumer spending slowdown).
Title:
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Title:
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Title:
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Title:
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Title:
Post by: Fred93 on May 21, 2016, 11:00:00 PM
Post by: Fred93 on May 21, 2016, 11:00:00 PM
Title:
Post by: Peter on May 21, 2016, 11:00:00 PM
Post by: Peter on May 21, 2016, 11:00:00 PM
Title:
Post by: Lovinglifestyle on May 21, 2016, 11:00:00 PM
Post by: Lovinglifestyle on May 21, 2016, 11:00:00 PM
Title:
Post by: rawraw on May 21, 2016, 11:00:00 PM
Post by: rawraw on May 21, 2016, 11:00:00 PM
Title:
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Title:
Post by: jheizer on May 21, 2016, 11:00:00 PM
Post by: jheizer on May 21, 2016, 11:00:00 PM
Only 99 job listings right now... http://chj.tbe.taleo.net/chj06/ats/careers/jobSearch.jsp?org=LNDC&cws=1
Title:
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Title:
Post by: LonghornSF on May 21, 2016, 11:00:00 PM
Post by: LonghornSF on May 21, 2016, 11:00:00 PM
I read that they cancelled their summer intern program, so that's one step. Leaving the interns high and dry is a pretty crappy move on LC's part though in my opinion. They're going to need to cut some engineers and other highly paid employees to really get expenses down.
The other thing to consider is you have a whole lot of employees who just saw their option "income" go up in smoke. If LC wants to retain the good ones LC will need to cut a new options deal with them, as they did with Sanborn. The rest are SOL unfortunately. I wonder what morale is like there these days. Have to be a whole lot of pre-IPO employees that are now royally pissed.
The other thing to consider is you have a whole lot of employees who just saw their option "income" go up in smoke. If LC wants to retain the good ones LC will need to cut a new options deal with them, as they did with Sanborn. The rest are SOL unfortunately. I wonder what morale is like there these days. Have to be a whole lot of pre-IPO employees that are now royally pissed.
Title:
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
Post by: TravelingPennies on May 21, 2016, 11:00:00 PM
From the 10K
Quote
Quote
Title:
Post by: dompazz on May 22, 2016, 11:00:00 PM
Post by: dompazz on May 22, 2016, 11:00:00 PM
Cutting the intern program makes sense, even it is not a large cost. You have federal investigations and are under intense scrutiny by the press. The last thing you want is a low paid intern to get access to sensitive information and share it with the world. I saw it as a "closing ranks" move, not a cost savings move.
Title:
Post by: TravelingPennies on May 22, 2016, 11:00:00 PM
Post by: TravelingPennies on May 22, 2016, 11:00:00 PM
Quote
Title:
Post by: TravelingPennies on May 22, 2016, 11:00:00 PM
Post by: TravelingPennies on May 22, 2016, 11:00:00 PM
Title:
Post by: TravelingPennies on May 22, 2016, 11:00:00 PM
Post by: TravelingPennies on May 22, 2016, 11:00:00 PM
Maybe marketing spend will come down due to all the free press? ha ha
Title:
Post by: Rob L on May 22, 2016, 11:00:00 PM
Post by: Rob L on May 22, 2016, 11:00:00 PM
Title:
Post by: TravelingPennies on May 22, 2016, 11:00:00 PM
Post by: TravelingPennies on May 22, 2016, 11:00:00 PM
Title:
Post by: rawraw on May 22, 2016, 11:00:00 PM
Post by: rawraw on May 22, 2016, 11:00:00 PM