In his recent post, Alan Kaplinsky rightly warned that recent remarks by Director Cordray strongly imply that payday and other short-term loan products may be in “the CFPB’s line of fire.”  What bothers me is that, to my knowledge, the CFPB has not even commenced, much less completed, payday lending studies designed to ascertain whether payday lending is indeed harmful to consumers.  And the leading academic study on payday-loan consumer outcomes conducted by disinterested researchers from the Federal Reserve Board, Vanderbilt University and the University of Pennsylvania, concludes, based on regression discontinuity estimates, that “the long-run effect of payday borrowing on credit scores and other measures of financial well-being is close to zero.” 

We have been repeatedly assured that the CFPB will be a data-driven agency.  To the contrary, Director Cordray’s remarks suggest that the CFPB has pre-judged the payday lending industry, without stopping to develop the statistics and perform the analysis necessary to establish consumer injury and sufficient to justify aggressive regulation.