Email me if you'll lend me $10,000

The title to this post is neither spam nor a joke. A new service, called Prosper Marketplace, gives individual lenders "the privilege to bid" on loaning up to $25,000 to individual borrowers. Building on the success of E-bay, Lending Tree, and, well frankly, Match.com. Prosper allows borrowers to post a picture of themselves and a story of why they want or need money. Borrowers also submit credit information and receive a rating from AA to HR ("high risk".) Borrowers can join "groups" to add to their credibility, such as "Veterans Helping Veterans," "Marquette University Alumni and Friends," and "Teacherloans.com." Prosper charges a modest fee for each loan completed. The Wall Street Journal and Salon have both reported in detail on Prosper.

While it is too early to know if Prosper will live up to its name (the first loans are just hitting the 120 day period after which they can be labeled in default), I think the early interest in the site reflects frustration with the lending industry. Traditional banks are viewed as too slow and stodgy. Credit cards are viewed as overpriced and too aggressive in collection. Prosper's model is to literally "bank" on people's interest in each other. The bidding process combats lender greed, and the vetting process forces borrowers to answer very personal questions about why they need the money. Prosper provides a public glimpse at the variety of reasons that people borrow small sums of money, including to fund a wedding, to make up a gap period before college financial aid arrives, and to pay the closing costs on a house purchase. These types of transactions are usually hidden from view because payday lending and credit card data are proprietary and confidential. The willingness of Prosper's borrowers to share their financial lives is perhaps a reflection of society's comfort with borrowing money as a routine part of American consumer behavior.