So, according to a buddy of mine, he belongs to a bank disintermediation group. I had to look up disintermediation and it just means cutting the middle man out. According to him, the members of the group agree to borrow and lend from one another at a rate determined within the group. He said, "Why should I put my money into a savings account and then the bank lends it out to someone else for a higher rate? Why don't I just go direct?"
He said the group he's in is only open to accredited investors, so it's not open to me. Is that true of all these types of groups? If one wanted to find/start a group such as this, how would one do so? I tried googling it, but I didn't find anything useful. Does it go by another name? Has anyone heard of anything like this?
@Zosimus wrote:So, according to a buddy of mine, he belongs to a bank disintermediation group. I had to look up disintermediation and it just means cutting the middle man out. According to him, the members of the group agree to borrow and lend from one another at a rate determined within the group. He said, "Why should I put my money into a savings account and then the bank lends it out to someone else for a higher rate? Why don't I just go direct?"
He said the group he's in is only open to accredited investors, so it's not open to me. Is that true of all these types of groups? If one wanted to find/start a group such as this, how would one do so? I tried googling it, but I didn't find anything useful. Does it go by another name? Has anyone heard of anything like this?
I haven't heard of this, but I think anyone doing it is going to learn what kind of trouble can come with lending money to acquaintences. Your friend's question of why he should have savings at a bank when the rate he earns on the savings is less than what the bank earns lending an equivalent amount of money has a pretty obvious answer: he doesn't assume the risk of lending that amount, the bank does. He may think of this as an alternative to savings, but it looks like a very risky form of investment to me.
@Zosimus wrote:So, according to a buddy of mine, he belongs to a bank disintermediation group. I had to look up disintermediation and it just means cutting the middle man out. According to him, the members of the group agree to borrow and lend from one another at a rate determined within the group. He said, "Why should I put my money into a savings account and then the bank lends it out to someone else for a higher rate? Why don't I just go direct?"
He said the group he's in is only open to accredited investors, so it's not open to me. Is that true of all these types of groups? If one wanted to find/start a group such as this, how would one do so? I tried googling it, but I didn't find anything useful. Does it go by another name? Has anyone heard of anything like this?
Sounds like a good recipe for disaster. But to answer your question, no I've never heard of anything like this.
Well, I was hoping to become a borrower not a lender.
@Zosimus wrote:Well, I was hoping to become a borrower not a lender.
If the situation is that someone random has told you about this and is now proposing that you borrow money from these people, that sounds a lot like they're trying to walk you into a scam of some kind. If you can already get actual credit at regulated institutions, I don't see a reason to be tempted by this in any case.
When I first read this thread a few days ago the Indian/Persian/Middle Eastern Hawala network first came to mind, but as @Zosimus suggested, the second thing which came to my mind was SCAM. Such networks are based upon trust, but how do you know whom you can trust?
