Scott Krager, a social lending enthusiast from Seattle, WA has created Uncrunch a pretty good suggestion for Uncrunching the credit crunch. He writes as follows:
The credit crunch currently crippling America’s economy is not due to a lack of available funds. It is caused by dysfunctioning credit markets and by the banks having adopted an overly conservative credit policy in the wake of the subprime meltdown. After very permissive lending practices for many years, the pendulum has now swung the other way.
But the money has not disappeared. The money is still there, with roughly $6 trillion currently sitting in deposits, CDs and savings accounts earning interest at 3% and not being lent out by the banks. This is enough money to get small businesses through the credit crisis, offer student loans to everyone who needs it and refinance half of all mortgages in America.
Our idea is simple: unlock these resources, enable the people who have the money to lend it directly to creditworthy people who need the money through a new (yet tested over the last couple of years) mechanism called social lending: people lending money to each other at fair interest rates. With this aim in mind, we have created Uncrunch America (www.uncrunch.org), to give us a chance to help each other out.
Several companies have already joined us in putting together the banking infrastructure necessary to make it happen (credit reporting, authentication, funds transfer, bank account verification, regulatory framework including lending licenses and SEC clearance, etc.) and have already committed to lend $1MM through Uncrunch America.
Our initial goal is to get 1 million people to participate (a small fraction of those watching the inauguration speech!) and our hope is that the US Government will help by matching funds lent by individuals through Uncrunch America. We believe this is a more efficient way to use the bailout funds because this directly encourages lending, and will help restart the credit markets — from the bottom up.
The scheme is supported by Lending Club where you can borrow up to $25,000. with rates as low as 7.88%.
