New York Times Didn`t Do Its Research on Payday Lending, Says CFSA

Mon Jul 13, 2009 2:59pm EDT

* Reuters is not responsible for the content in this press release.

WASHINGTON--(Business Wire)--
The New York Times editorial board demonstrates an extraordinary lack of depth
and knowledge of the payday advance industry in today`s editorial which calls
for restrictions on the industry, says CFSA. 

The editorial references a consumer group paper about customer usage-a consumer
group that has already been criticized by data collectors for it misuse of their
data-while ignoring a large body of research that demonstrates how payday
advances help consumers improve welfare and prevent financial disruptions. 

A small sample of the research ignored by the New York Times includes:

* In "Restrictions on Credit: A Public Policy Analysis of Payday Lending," Petru
S. Stoianovici of The Brattle Group and Michael T. Maloney of Clemson
University, says: "There is no statistical evidence to support the `cycle of
debt` argument often used in passing legislation against payday lending." 
* Professor Adair Morse at the University of Chicago says in "Payday Lenders:
Heroes or Villains?": "Natural disasters induce an increase in foreclosures, but
the existence of payday lenders significantly offsets this increase…."For these
individuals, the existence of payday loans raises welfare…."If the existence of
payday lending is valuable for those facing personal disaster in a way that
other financial institutions cannot provide, then regulators should strive to
make access to finance easier and more affordable, not ban it." 
* Donald Morgan, a researcher at the New York Federal Reserveconducted a study
"Payday Holiday: How Households Fare after Payday Credit Bans" that concluded:
"Georgians and North Carolinians do not seem better off since their states
outlawed payday credit: they have bounced more checks, complained more about
lenders and debt collectors, and have filed for Chapter 7 ("no asset")
bankruptcy at a higher rate." 
* A study conducted at George Mason University and Colby College, "Restrictions
on Payday Loans Do More Harm Than Good," says: "…a growing body of research,
including ours, suggests that access to payday loans can benefit borrowers, so
long as they do not abuse the product….banning payday loans, or severely
restricting their availability by capping interest rates, harms the very people
whom consumer interest groups and their political allies are trying to help."

About the Community Financial Services Association of America

The Community Financial Services Association of America (CFSA) is the only
national organization dedicated solely to promoting responsible regulation of
the payday advance industry and consumer protections through CFSA`s Best
Practices. As such, we are committed to working with policymakers, consumer
advocates and CFSA member companies to ensure that the payday advance is a safe
and viable credit option for consumers.

Dezenhall Resources
Steven Schlein, 202-296-0253

Copyright Business Wire 2009

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