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The CFPB and Payday Lending: New Agency/Old Problem

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Listed:
  • LARRY KIRSCH
  • ROBERT N. MAYER
  • NORMAN I. SILBER

Abstract

type="main" xml:id="joca12036-abs-0001"> The Dodd-Frank Act of 2010 brings nonbank payday lenders under federal regulation for the first time. The question of precisely how to regulate the payday loan industry creates a number of difficult challenges for the newly created Consumer Financial Protection Bureau (CFPB). Whereas most consumer advocates would prefer to ban or strictly limit high cost payday lending activity and address unfair/abusive lending practices, the CFPB must also be attentive to the impact of regulation on credit access for low-wage, credit-constrained payday borrowers. This article highlights the policy, legal, and institutional issues raised during the CFPB's decision-making process. The CFPB has the opportunity to dramatically shift the longstanding consumer protection paradigm in favor of real-world protection of vulnerable borrowers and, thereby, to realize the hopes of the activists who helped to bring the Bureau into existence .

Suggested Citation

  • Larry Kirsch & Robert N. Mayer & Norman I. Silber, 2014. "The CFPB and Payday Lending: New Agency/Old Problem," Journal of Consumer Affairs, Wiley Blackwell, vol. 48(1), pages 1-16, March.
    • Handle: RePEc:bla:jconsa:v:48:y:2014:i:1:p:1-16
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    References listed on IDEAS

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    1. Brian T. Melzer, 2011. "The Real Costs of Credit Access: Evidence from the Payday Lending Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(1), pages 517-555.
    2. Marianne Bertrand & Adair Morse, 2011. "Information Disclosure, Cognitive Biases, and Payday Borrowing," Journal of Finance, American Finance Association, vol. 66(6), pages 1865-1893, December.
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