CFPB Has Confirmation Bias

Confirmation bias is a tendency of people to favor information that confirms their beliefs.   The CFPB does not identify with the short-term product or the people that use it.  They just don’t like it and their going to find any data they can find to build a case against the industry.  They want to stick everyone in the industry into one bucket, and the lenders that are providing a valuable service to borrowers get screwed.

The CFPB has taken a one-sided, biased and small data sample from The Pew Charitable Trust on payday loans.   For example, doing an interview with 451 to 703 in-depth interviews.  How you interview people and what questions you ask can severely influence people?   We have turned into a victim society.  Rather than asking people to take responsibility for their choices, we turn them into victims.   Once their “victims” they are unable to improve their life situation.  They stick society with the bill.

So what is the solution?  Eliminating the use of deceptive practices.  The CFPB should work with the payday loan industry to make these products more transparent and the terms more understandable.

I guess I don’t understand why the payday loan industry is so different from other industries, but I do know the reason.  The government inhibits competition by over-regulating the industry.  This stops innovation and competition.  Remember how expensive it was to fly before the travel sites sprouted?  Buying a car online has completely changes the automobile industry.  Instead of evolving, the CFPB is going to push the industry underground.

Interested in reading more….Tim Rainy of Clarity writes to the NY Times in response to the Pew Trust research.


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