David Silberman, the CFPB’s Associate Director of Research, Markets and Regulations, made the CFPB’s April 2013 white paper on payday and deposit advance loans the focus of his testimony at the hearing held on July 24 by the Senate’s Special Committee on Aging entitled “Payday Loans: Short-term Solution or Long-term Problem?”  

As we previously reported, the paper’s methodology and data has been criticized by industry, which has labeled it “demonstrably incomplete and misleading.”  Many of these flawed findings were presented by Mr. Silberman, such as the paper’s finding that only a “fairly small segment of consumer use payday loans or deposit advances on an occasional basis.”  

Like the CFPB’s paper, Mr. Silberman repeatedly referred to payday and deposit advance loans as “traps.”  We have previously commented that such pejorative language ignores the reality that payday and deposit advance loans have very real benefits, and for many consumers, such products may be better than the alternatives.   

We have also previously commented that for the CFPB to truly be the “data-driven” agency it claims to be, it must conduct a cost-benefit analysis before engaging in any rule-making on payday and deposit advance loans.  However, also like the CFPB’s paper, Mr. Silberman’s discussion of the CFPB’s next steps does not mention conducting such an analysis.