If his future loans will all be backed with 100% collateral then he cannot scam anyone. Or am I missing something. Come to IBM anytime for a fully backed loan and I will even give you a break on the interest.
If he's willing to put his GLBSE shares in a escrow as a collateral then it's cool. But also there is no point of asking for small loans for rep, with collateral he can ask for as much as he has of collateral.
Depending on the perceived value of the collateral.
The collateral for this loan did not cover interest, and in larger quantities one would also need to take into account that selling the collateral if necessary could result in a large decrease in price if there is not enough liquidity.
For a $1 loan, I wasn't so concerned. I did it more for the novelty.