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Illustration: Sarah Grillo/Axios

Lending Club was founded on the idea of bringing individual borrowers and lenders together. Those days are now officially over.

Why it matters: The peer-to-peer dream was that Americans could deal directly with each other, rather than having to go through hated banks.

  • Lending Club was the foremost avatar of that dream. But the company soon realized that it was a lot easier to borrow money from hedge funds, or the market, than it was to provide the ability for people to make tiny loans to hundreds of different borrowers.
  • Individual lenders wanted higher returns, too. If Lending Club wanted the lowest borrowing costs for its borrowers, it had to move to wholesale funding.

Eventually, Lending Club decided it should just become a bank — so it announced the acquisition of Radius Bank in February.

  • Banks intermediate between borrowers and lenders. If you lend to an FDIC-insured bank like Radius, you take no credit risk, and let the bank worry about what happens if borrowers default. (Lending to a bank and keeping money on deposit at a bank are ultimately the same thing.)
  • It's the exact opposite of the peer-to-peer model, which was built on the idea that individuals are more likely to repay other individuals than they are to repay a faceless financial institution. If that was ever true, it isn't any longer.

The bottom line: Peer-to-peer lending failed. When Lending Club went public in 2014, it was worth more than $9 billion. Today, it's worth just $350 million.

Go deeper

Ro Khanna: Government must focus lending on rural and minority communities

Photo: Axios screenshot

Rep. Ro Khanna (D-Calif.) said during an Axios virtual event that the Federal Reserve Board needs to be able to give loans in rural and minority communities, which have been some of the most affected during the coronavirus pandemic.

Why it matters: People in rural and minority communities have been disproportionally impacted by the coronavirus.

Focus group: Former Trump voters say he should never hold office again

Illustration: Sarah Grillo/Axios

"Relief" is the top emotion some swing voters who used to support Donald Trump say they felt as they watched President Biden's swearing-in, followed by "hope."

Why it matters: For voters on the bubble between parties, this moment is less about excitement for Biden or liberal politics than exhaustion and disgust with Trump and a craving for national healing. Most said Trump should be prohibited from ever holding office again.

Updated 13 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Eniola Odetunde/Axios

  1. Health: Most vulnerable Americans aren't getting enough vaccine information — Fauci says Trump administration's lack of facts on COVID "very likely" cost lives.
  2. Politics: Biden unveils "wartime" COVID strategyBiden's COVID-19 bubble.
  3. Vaccine: Florida requiring proof of residency to get vaccine — CDC extends interval between vaccine doses for exceptional cases.
  4. World: Hong Kong to put tens of thousands on lockdown as cases surge.
  5. Sports: 2021 Tokyo Olympics hang in the balance.
  6. 🎧 Podcast: Carbon Health's CEO on unsticking the vaccine bottleneck.

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