It’s tempting to think that LendingClub‘s (NYSE: LC) business model carries much less risk than a traditional bank. This is because Lending Club is a marketplace lender, meaning that it doesn’t typically make loans with its own capital and thereby sidesteps credit risk, the scourge of banking.
But there’s a problem with this assumption. Namely, banks don’t tend to fail because of credit risk, but rather because of liquidity risk, which is something that LendingClub can’t hide from, as it recently learned.
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