We have been critical of the failure of the CFPB’s white paper on payday and deposit advance loans to address the very real benefits of payday loans or the question whether (and when) such benefits outweigh the costs.  Similar criticism was also voiced by the Community Financial Services Association of America (CFSA), a national trade organization for payday lenders, in a letter to the CFPB.  In its letter, the CFSA commented on the absence of “real world context” from the report and called upon the CFPB to develop an “understanding [of] the choices and consequences faced by those in need of short-term credit and the risks of driving people to higher-cost products, expensive penalties or less-regulated providers.”

Last week, during the public session of the meeting of the CFPB’s Consumer Advisory Board (CAB), it appears Director Cordray and the CAB heard a similar message from actual payday loan customers and other industry supporters.  According to a report in the May 17, 2013 American Banker, dozens of payday loan supporters wearing stickers that read “My Credit … My Decision” attended the public session.  Among the comments made by supporters was that payday loans are often a cheaper option than overdraft fees.  The CFPB was urged by a supporter not to “demonize” payday loans and a payday loan customer expressed gratitude for being able to obtain such loans.

The CAB was scheduled to hold a separate session devoted to payday loans during its meeting which was not open to the public.  Upon learning that the public would be excluded from that session, an attorney for the CFSA sent a letter to the CFPB asserting that the CFPB’s action violated the Federal Advisory Committee Act.