Here's another new approach to democratizing consumer finance: LoanBack, launched back in December. LoanBack takes a much simpler approach than Zopa and Prosper.com - LoanBack is designed primarily for documenting friends and family lending.

MSN Money's Bob Sullivan writes about the risks of instant credit and identity theft, calling instant credit an "equal opportunity nightmare."

"Immediacy is the enemy of accuracy,” says Marty Abrams, former executive at credit bureau Experian Corp., and now an analyst with Hunton & Williams.  “ID thieves are successful because we have a marketplace based on immediacy. We can’t move away from instant credit but it is the enemy of good authenticity.”

Kathy Kristof reports in this morning's Los Angeles Times on payday lenders.

The payday lending industry, virtually nonexistent a decade ago, accounts for roughly $25 billion annually in loans, according to a recent study. More than 90% of payday loans are made to repeat borrowers such as Monti, whose short-term cash crisis was only worsened by the quick fix.

The article goes on to say:

The typical annual effective percentage rates on payday loans range from 391% to 443%, according to a study (PDF) released last month by the Center for Responsible Lending. Payday lenders get around state usury laws by characterizing the cost as a fee rather than an interest rate.