Cutting Out the Middle Man: A Mutualist Examines Online Loan Exchanges

The idea of an online loan exchange is very interesting in that it cuts out the middle man, making banks, credit card companies et al irrelevant. Like the betting exchanges and ebay it puts buyers directly in contact with sellers. Zopa takes a cut from the borrower and the lender can use the service for free. Now mutualists should not get too excited at this scheme as it is corporate funded and backed by Benchmark Capital and also makes use of the same debt collection agencies as the high street banks.

There is also the prospect of debt peonage between individuals, although Zopa does acknowledge that ultimately the lender bears the final risk in cases of default. There is also the fact that it uses standard credit risk arrangements to asses borrowers, dividing them into profitable sheep and miserly goats. So this online loan exchange does have its good points in that it potentially allows ordinary people greater access to capital and minimises the role of exploitative capitalist banks. It is possible to see how this kind of arrangement would work in a mutualist or co-op banking system freed of state control, with local co-ops and small businesses exchanging and borrowing from one another using informal loan exchanges descended from early capitalist examples like Zopa.