Earlier today, the CFPB released a white paper reporting on its study of 15,000,000 storefront payday loans and 100,000 accounts eligible for deposit advances (of which approximately 15% involved a deposit advance during the study period). At the same time (and probably not coincidentally), “people familiar with the matter” leaked that the OCC and FDIC are “set to hand down tough new rules to govern” deposit advances.

To be sure, there is a wealth of information in the CFPB white paper concerning usage patterns for payday loans and deposit advances.  However, the report is also notable for what it fails to say.

The CFPB claims that its “avenues of inquiry” included “outcomes that are correlated with certain patterns of use” but this claim is not supported by the white paper.  In the ongoing online payday lending study it has commissioned, the CFPB is attempting to link usage patterns with credit scores and other indicia of financial well-being.  However, the storefront study does not even purport to look into credit scores of payday borrowers and similarly situated consumers who do not get payday loans, and it never addresses in any manner the very real benefits of payday loans or the question whether (and when) such benefits outweigh the costs.

The CFPB white paper concludes with the promise of regulation: “The potential consumer harm and the data gathered to date are persuasive that further attention is warranted to protect consumers.  Based upon the facts uncovered through our ongoing work in this area, the CFPB expects to use its authorities to provide such protections.”  However, if it truly means to be a data-driven agency, the CFPB needs to do a cost-benefit analysis, not just a cost study, before it moves forward with rule-making.