The most recent series of disasters on Wall Street are front-page news, even as some of the market begins  to stabilize.. To the extent that the media coverage and public discussion go beyond sensationalism and look for causes of the situation, the move to deregulate credit markets over past few years is the main target. That’s equally because it’s largely true and because it’s the discussion that the presidential candidates want to have: railing against out of control bankers and demanding tighter policy is a good platform in a dramatically shaky economy.

But there might be other solutions that are more far reaching and more radical.

The current mess still has to do with highly rated assets backed by risky loans in a market with falling home values and stagnant incomes–the subprime mortgage debacle that’s over a year old now. One factor that contributed to this getting out of hand was these assets were heavily leveraged (up to forty times). That is, banks were lending much, much more than they had. Of course, these factors are also filtered through the now fairly arcane financial system, adding further twists and turns.

What if none of that were necessary? What if individuals (if not companies) could finance purchases like houses and cars without banks and the complexities that seem to now come with them?

Enter peer-to-peer lending. A number of new companies like Zopa have begun facilitating loans between individuals. Even Virgin group is getting in on this and more are on the way. Compared to intricacies of the major banks, the premise of peer-to-peer lending is strikingly simple: match up borrowers and lenders and get money from those with extra to those who need it. The advantages are enormous: individual lenders get to evaluate their own level of risk based on the borrower rather than having that decision made totally opaque by the bundling of risk into articifial investment vehicles. The structure of the situation changes from many lenders (investors) and many borrowers (mortgage holders) having their interaction mediated through an enormous, clunky, strangely-incentivized institution to an abundance of local interconnections. The practice removes bottle-necks and multiplies personal connections.

Put that way, peer-to-peer lending mirrors many other social technology developments. Empowering individuals by connecting them to each other is a major part of the optimistic mission of Web 2.0 and everything associated with it. Translating that impulse into the serious realm of finance is both potentially radical and a bit unsettling. Despite their recent troubles, major financial institutions are a familiar fixture and the way most people expect the market to conduct itself. However, they are in someways a hold over from a time when the only way to coordinate many small activities was by turning them over to a big entity that specialized in doing so. That’s not the case anymore.

Peer-to-peer lending is up recently, and it remains to be seen whether continued Wall Street troubles will mean continued growth in that space. Regardless, the practice probably won’t be replacing traditional loaning practices any time soon. That doesn’t mean that new technologies aren’t opening up new and unforseen possibilities for economic organization.

Yet another reason to take emerging patterns in social technology seriously and not dismiss it as a fad.