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Lending Club Can Be a Better Bank Than the Banks

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None of that is exactly wrong, but here is a more accurate picture: 2

  1. You want a loan, fill out the form, etc.
  2. I open an account, think you look likely, etc.
  3. A bank gives you the loan.
  4. The bank sells the loan to Lending Club.
  5. Lending Club keeps the loan on its balance sheet.
  6. Lending Club creates an unsecured structured note referencing that loan.
  7. It sells that note to me.
  8. Then you make payments to Lending Club, and it makes payments on the note to me.
  9. You never owe me money: You owe Lending Club money, and Lending Club owes me money.

Seems fishy. 

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