As I understand, Zopa CD has nothing to do with what we traditionally come to regard as CD and as such, isn’t linked to federal rates at all.
The money is simply lent out, P2P style, but the remaining interest spread is used paid to 3rd party for insurance and some of it paid to Zopa themselves.
So, the borrower probably pays 10% on that money you invested, 5.1% go to you, 2.5% go to insurance entity, to cover in case of default, and the rest goes to Zopa.
The percentages above are arbitrary, since I don’t know real numbers, but I think that the concept.
Now, personally, I generally rather assume the risk myself (and thus invest in Prosper.com), since knowing insurance companies are motivated to Make money (versus loose money), the risk must be worth the reward!
Ok, I spent some time reading through Zopa FAQs and what not, and I can see what you mean now.
I must have been confusing the concept with another P2P lender, since Zopa does simply give you FDIC insured CD.
They put interesting social spin on plain vanilla CD, neat!