Prosper: great idea, but will it work?

I've always wanted to start a credit union at my workplace, but I've resisted the impulse so far.

Ideally, there ought to be a way to match borrowers and lenders, by comparing credit ratings, interest rate required, etc. A new company, Prosper, is trying it.

Basically, lenders bid on amounts of loans to accept; the idea is to diversify your loan holdings so each lender is only in for a small amount on each borrower.

Very cool, if it works. Hopefully, it'll drive down interest rates for the borrowers, while still offering decent rates for the lenders.

It'll be interesting to watch it develop. Will I put money in? Maaaaybe. I could see lending out a few hundred bucks and seeing how it goes.