registerme
Member of DD Central
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Post by registerme on Mar 23, 2021 10:39:50 GMT
I agree with all of your post apart from the quote above. Banks perennially get burnt, in no particular order by customers, by regulators, or by their own hubris. 2007/8 wasn't that long ago.
References to 2008 are pointless stupidity.
The regulatory environment has changed substantially since then in a manner which is very much favouring the consumer, not the bank.
The segregation of retail side of banks from non-retail post-2008 is unrecognisable from what it was before.
Unfortunatley P2P never learns from its mistakes. And the regulatory environment surrounding P2P never changes. Its the same old mess. At least the banks and the bank regulators made a concerted effort to change substantially post-2008.
I guess that's why banks paid some $14b in fines in 2020? 
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Post by Ace on Mar 23, 2021 11:36:05 GMT
I agree with all of your post apart from the quote above. Banks perennially get burnt, in no particular order by customers, by regulators, or by their own hubris. 2007/8 wasn't that long ago.
References to 2008 are pointless stupidity.
The regulatory environment has changed substantially since then in a manner which is very much favouring the consumer, not the bank.
The segregation of retail side of banks from non-retail post-2008 is unrecognisable from what it was before.
Unfortunatley P2P never learns from its mistakes. And the regulatory environment surrounding P2P never changes. Its the same old mess. At least the banks and the bank regulators made a concerted effort to change substantially post-2008.
Infact it occurs to me what the biggest problem with your 2008 analogy is.
Many of the problems in 2008 stemmed from banks being too loose with lending criteria, too much sub-prime, too many self-certified mortgages.
Could the banks have done better pre-2008 ? Yes, sure.
Have the banks learnt their lessons and made significant changes post-2008 ? Yes, absolutely without doubt.
Meanwhile, what is P2P doing ?
Still busy lending to people who the banks won't touch post-2008.
Still relying far too much on the "trust me" of the Borrrowers.
Still not learning their lessons time after time.
Still not seeing the amount of regulatory change that the banks did 2008.
P2P, as presently operated and as presently regulated, is nuts and incredibly high risk.
As usual, there's a lot of sense in what you say, and I can't compete with your understanding of how financial institutions operate. However, the over-generalisation that all P2P is "nuts and incredibly high risk" is OTT. There are quality P2P offerings by professional and competent platforms that simply don't warrant this level of denigration. Take CrowdProperty as an example. Far from being a lender of last resort, they are specialist property lenders that offer a professional service to borrowers that aren't matched by the banks. Many SME property developers now use them as a lender of first resort. They give excellent risk adjusted rewards to their investors. They've resisted the temptation to lower their lending criteria through a sustained period of popularity, showing that they are committed to developing a long term sustainable business. Sure, there are endemic problems in P2P that need to be addressed, not least the pathetic regulation, but that doesn't make all P2P uninvestable, IMO.
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r00lish67
Member of DD Central
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Post by r00lish67 on Mar 23, 2021 12:07:24 GMT
As usual, there's a lot of sense in what you say, and I can't compete with your understanding of how financial institutions operate. However, the over-generalisation that all P2P is "nuts and incredibly high risk" is OTT. There are quality P2P offerings by professional and competent platforms that simply don't warrant this level of denigration. Take CrowdProperty as an example. Far from being a lender of last resort, they are specialist property lenders that offer a professional service to borrowers that aren't matched by the banks. Many SME property developers now use them as a lender of first resort. They give excellent risk adjusted rewards to their investors. They've resisted the temptation to lower their lending criteria through a sustained period of popularity, showing that they are committed to developing a long term sustainable business. Sure, there are endemic problems in P2P that need to be addressed, not least the pathetic regulation, but that doesn't make all P2P uninvestable, IMO. What makes you so confident that CrowdProperty (or any P2P platform) is so bulletproof though, Ace? There are a whole barrage of risks that they themselves list on their website, and that's just the ones they fancy declaring. I'd bet that they don't list the risk of their wind-down plan not being worth the paper it's written on, or the possible event of insolvency practitioners stripping every last piece of flesh off the bone before spitting out the carcass. Yet we've seen precisely that happen on numerous occasions. How about they turn out to be a bunch of frauds who aren't even registering charges properly or at all, or just siphoning off cash elsewhere? I don't see that risk there either, but it is one. For all of these risks and more, we then are typically asked to accept either a <5% return for a "safe" investment or up to 12% for what is in reality incredibly risky. It's just not worth it, in my opinion. Not for anything beyond play money anyway. (Again, I have nothing personally against CP, I am talking very generally here).
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r00lish67
Member of DD Central
Posts: 2,692
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Post by r00lish67 on Mar 23, 2021 12:16:32 GMT
To be fair, I know you diversify heavily Ace , so your risks are minimised in the worst scenarios. I'd still say though that one does risk being left with a pretty minimal return and a lot of admin/work to achieve it. |
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Post by Ace on Mar 23, 2021 12:20:40 GMT
As usual, there's a lot of sense in what you say, and I can't compete with your understanding of how financial institutions operate. However, the over-generalisation that all P2P is "nuts and incredibly high risk" is OTT. There are quality P2P offerings by professional and competent platforms that simply don't warrant this level of denigration. Take CrowdProperty as an example. Far from being a lender of last resort, they are specialist property lenders that offer a professional service to borrowers that aren't matched by the banks. Many SME property developers now use them as a lender of first resort. They give excellent risk adjusted rewards to their investors. They've resisted the temptation to lower their lending criteria through a sustained period of popularity, showing that they are committed to developing a long term sustainable business. Sure, there are endemic problems in P2P that need to be addressed, not least the pathetic regulation, but that doesn't make all P2P uninvestable, IMO. What makes you so confident that CrowdProperty (or any P2P platform) is so bulletproof though, Ace? There are a whole barrage of risks that they themselves list on their website, and that's just the ones they fancy declaring. I'd bet that they don't list the risk of their wind-down plan not being worth the paper it's written on, or the possible event of insolvency practitioners stripping every last piece of flesh off the bone before spitting out the carcass. Yet we've seen precisely that happen on numerous occasions. How about they turn out to be a bunch of frauds who aren't even registering charges properly or at all, or just siphoning off cash elsewhere? I don't see that risk there either, but it is one. For all of these risks and more, we then are typically asked to accept either a <5% return for a "safe" investment or up to 12% for what is in reality incredibly risky. It's just not worth it, in my opinion. Not for anything beyond play money anyway. (Again, I have nothing personally against CP, I am talking very generally here). I'm definitely NOT saying that CP are bulletproof. They aren't. There is risk of losing capital, as there is with all investments. I simply feel that there are some platforms where the risks are commensurate with the returns, and can provide a smoother income than other types of investments with comparable risks.
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