In response to the NY Times article we blogged about last week Lending Club CEO Renaud Laplanche responds to the accusation that high tech hedge fund “flashboys” are turning algorithms and computing speed to game the P2P loan market.
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No, Hedge Funds Aren't Hijacking Peer To Peer Loans, Says Lending Club CEO
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His simple explanation is that–at least in the case of Lending Club–no individual loan is better than another. He argues that the marketplace’s risk/yield ratings create fair pricing (all loans are equal when risk and payout are factored in). Because of this he argues there is no way to cherry pick favorable loans, and that computing speed doesn’t matter:
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