I left the following Comments with the current Consumer Financial Protection Bureau earlier today in opposition to repeal of the Payday Loan Rule. TODAY is the deadline for your own Comments to be heard! The contact information is all set out in my own Comments, below.
May 15, 2019
Consumer Financial Protection Bureau
Online at: https://www.regulations.gov
Re: Payday, Vehicle Title, and Certain High-Cost Installment Loans;
Proposal to Rescind or Repeal the "Payday Loan Rule."
Docket No. CFPB-2019-0006
RIN 3170-AA80
To the Director of the Consumer Financial Protection Bureau:
In your proposal to rescind the Payday Loan Rule you recite that it is cost-prohibitive for you to research the evidence to support your proposal.
Then you list ten (10) cites as source evidence in your proposal anyway.
Four of them are SSRN Working Papers which are, by their nature known to people who use them, unpublished pieces written as proposals for a future article. They are drafts and as such, they are not cited because they are not reliable in that form.
Another of your sources is from "Mercatus." Even George Mason University, where Mercatus is housed, will not allow its name to be affiliated with them.
One involved a survey of 48 borrowers in the Southeast of one State (not even across the whole State in question). This matches up very poorly with the over One Million Comments that the CFPB has already received on the Payday Loan Rule.
Another is to a cite that disagrees with your proposal to rescind the Payday Loan Rule. You cite it apparently to criticize it for not being based on "sufficient evidence" (a common refrain for the current CFPB, it appears). To the contrary, as I found when I examined the authority that you cite, the authors of that article applied "propensity score matching" in their investigation and explicitly stated that they actually did consider alternative causes before reaching their conclusion that you reject: "Although a variety of policies could mitigate the health consequences of these exposures, expanding social welfare programs and labor protections would address the root causes of fringe services and advance health equity." Jerzy Eisenberg-Guyot, Caislin Firth, Marieka Klawitter, and Anjum Hajat, From Payday Loans to Pawnshops: Fringe Banking, the Unbanked, and Health, 37 Health Affairs 429 (2018).
Another one of your cites, you note, found "a persistent reduction in liquor sales resulting from payday lending regulations that restricted access for frequent payday loan users." 84 FR at 4293. This seems at odds with your conclusion that the authors of that article are of the opinion that the effects of regulating payday loans are "not clear." Id.
You describe another of your cites as based on a small sample that did not distinguish among types of loans including payday loans.
That leaves your one cite, which you describe as using "a self-selected sample" to find that getting financial advice "is associated with less payday loan use, but that seeking debt counseling is correlated with a higher chance of payday loan use." 84 FR at 4293-4294. This does not support your proposal to rescind the Payday Loan Rule. It is evidence against it.
In short, the evidentiary basis for rule-making here is definitely in support of retaining the Payday Loan Rule and against rescinding it without replacing it with something better in terms of consumer financial protections. Your proposal does not replace the Payday Loan Rule with anything. Your proposal to rescind the Payday Loan Rule is contrary to law and to the evidence and should be withdrawn.
Thank you for your consideration.
Sincerely,
Dennis Wall
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