Peer-to-peer lending is only a few years old. These Internet sites basically match people who need a loan for, say, $1,000 to $25,000, with dozens or hundreds of strangers willing to lend amounts as small as $50. Lending sites act as the go-between, collecting borrowers' payments and forwarding them, along with interest, to the myriad of lenders.

"It's a great idea for the consumer. It's a great idea for the consumer lender," says Jim Bruene, editor of Online Banking Report. Borrowers can shop for loans from numerous lenders without it dinging their credit score, he says. Lenders can reap better returns than with some other investments. ... because it and other Web sites like it could benefit from the transparency that regulation would provide.

Eileen said it might not be bad news for the company, because regulation would result in greater protections for lenders and loan recipients, as well as more transparency.

That's why Prosper's counterpart Lending Club pursued SEC regulation and completed its process in October. For more info check out Eileen's column on peer-to-peer lending.  

In other news, this week's Watchdog column on a Ridgely's Delight street tree marked for execution, yet remained standing far longer than expected, shed some light on what happens if a tree is shedding bark or otherwise exhibiting signs of sickness. When Elizabeth Conkling's sister called 311 to have the dead branches trimmed, the inspector deemed it both dead and diseased. Then a sign was posted allowing people to protest its removal. Read the column to find out how Watchdog was able to help.