CFPB Turns Focus to Payday Loans with New Report, Cordray Speech

The Consumer Financial Protection Bureau (CFPB) Tuesday released a research report on payday lending and presented some of the findings at a field hearing in Nashville. CFPB Director Richard Cordray noted at the hearing that his group is in the “late stages” of formulating new rules for short-term loans.

The extensive report released today is based on data from a 12-month period with more than 12 million storefront payday loans. It is a continuation of the work in last year’s CFPB report on Payday Loans and Deposit Advance Products, one of the most comprehensive studies ever undertaken on the market.

Researchers found that a primary driver of the cost of payday loans is that consumers may roll over the loans or engage in re-borrowing within a short window of time after repaying their first loan. The study looks at not only the initial loans but also loans taken out within 14 days of paying off the old loans; it considers these subsequent loans to be renewals and part of the same “loan sequence.”