Well to be fair, loan growth was declining for 4 consecutive months (June-Sept) prior to the quiet period – with the Sept ’08 seeing the lowest level of loan grown since Sept ’07.
http://www.ericscc.com/, http://www.lendingstats.com/loansFunded

- Borrower does not repay (the default rate of the historical data is approximately 40%)
- Borrower fraud (Prosper found that 37.7% of the small number of attempted borrower verifications did not supply satisfactory information and yet did nothing other ~80% of loans that went unverified even while knowing that over 1/3rd of those would not have passed verification)
- Prosper’s admitted conflict of interest in regards to its identity theft program which it has refused to enforce over the past few years.
- The fact that new notes are obligations of Prosper, not obligations of the borrower, so if Prosper goes bankrupt but the borrowers are still repaying, the “Investors” don’t get a penny.
- And many many more issues.