Liquidity Event (GS)

1) I don't know what information you think you have on AC, but clearly they weren't able to solicit enough investment, given their own liquidity problem (again, like all other platforms). So I don't see this as relevant.

2) The sorts of government arrangements you're talking about take time and were not in place when GS were forced to call the LE. I really don't understand what you think they could have done differently, given the position they were in.

3) These government schemes will be available to many of GS's borrowers through other routes anyway. For our purposes, it doesn't matter much where they get the money, as even if it were through GS those would not be loans that we would be holding (GS would be financing them privately).

4) Even if this happened, all this would do would be to materially reduce the GS (retail investor financed) loanbook - which is exactly what GS have been doing in recent weeks anyway. This doesn't actually solve the liquidity issue alone. The most important thing - as I've mentioned multiple times now - is to have a withdrawal system for investors that requires liquidity for a withdrawal to be possible.

I hope that's now finally clear.

Whether caused by a pandemic, or asteroid collision or whatever, it appears GS have insufficient reserves or are ill equipped to cope, as shown by their staff responses to fairly simple emails I have sent to them.



Why should I not be "obsessed" with their internal staffing arrangements, these are items that the FCA will [should, according to their own manuals] also check, as too any outside capital provider, such as MC? Staffing abilities and arrangements were all contributory factors to the fall of many collapsed P2P platforms.



I presume you were not at their last investor evening??? Will you be at their next investor evening??



It’s not that "complicated", but one has to ask the question, why are GS in such a liquidity position when there are other P2P lenders that are managing, albeit with less difficulty than GS?



I agree with you on one point, we are going around in circles for whatever reason, so will leave it here.

Fair point - I meant the mainstream, larger platforms operating on this sort of model. Although I wonder if this isn't just a matter of time in most other cases too...

I also think this is separate from a discussion about platform failure. I don't think this has, for example, demonstrated a 'weakness' per se at RateSetter. If anything, it shows how their model was built to deal with a run on withdrawals. This is what stands GS apart - they had no system in place to deal with a run on withdrawals, and that is what may lead them to trouble as a platform.

No, there's a significant difference.

RateSetter is explicit in its terms that, for investors to be able to release investments, there needs to be money going the other way. For simplicity's sake, basically a £100 RYI needs a roughly £100 being invested onto the platform. This was the case and is still the case at RS; it's just that now the tide has shifted virtually in one direction only. So RYIs are very slow, but essentially nothing has really changed - the system has always required this (it's just that it has become more obvious due to queue numbers and the daily updates etc.).

GS did not require such liquidity. Money could be withdrawn from the platform, eating away at the cash buffer with no method to control it until things were too late and the whole platform's function has to be suspended until they can work out a way to solve the problem. One way to solve it would have been to have had a similar requirement to RS, which GS have never had (read their terms).

There is a really big difference between just continuing to enforce the liquidity requirement rule you've always had and shutting down your platform because you never had such a rule. See the difference?

Edit: Put another way, it's the difference between 1) requiring liquidity for withdrawals, and 2) requiring liquidity for your platform to remain open. 

I think you've misunderstood. I'm not ranking the problems RS is experiencing, I'm making a specific comparison with regard to one particular issue: how a lack of liquidity is dealt with. The RS stabilisation period and interest rate haircut is a completely different issue to what we're discussing here (did you read the posts leading up to this one?). Also, the 'run on withdrawals' began long, long before the stabilisation period and haircut (having been caused by broader concerns regarding the global economy) - it was not a 'resulting loss in confidence' from the haircut at all.

Also, I didn't say liquidity was the threat to RS's survival?? I said the opposite: that RS have a pre-existing mechanism in place to deal with the liquidity issue, whereas GS do not. Which is the essential difference between the two that I was trying to explain, and why GS may struggle (not RS). Please actually read what I write and engage with this rather than arguing against a strawman.

Then please do point me to where I was discussing what the most pressing issue facing RS was, and predicting that lack of liquidity will be RS's main threat?

I'm struggling to see the argument that one platform had a plan and the other didn't. As I see it,  both platforms had a documented plan which they are both now executing. RS with its stabilisation period,  and GS with its liquidity event. You can debate which is the better plan and which has the better chance of saving its respective platform, but not really whether they had a plan.

My own view is that neither platform will survive in its present form. Whether either will be able to morph into a more attractive proposition only time will tell.