New CFPB Hire is a Bad Omen for Alternative Lenders

New CFPB Hire is a Bad Omen for Alternative Lenders 

So far, the Consumer Financial Protection Bureau, in its less than one year of existence, has personifies the attention and focus of an over stimulated ten-year-old child on Christmas morning. The CFPB has repeatedly shifted its attention, from credit card and debit card fees, to payday lending laws, to student loans, but has accomplished little more than information gathering on any of these subjects.  

While critics were originally worried that the ambiguous scope of the Bureau’s power would lead to excessive meddling in the economy, and create a heavy handed government specter in the financial sector; today, critics are wondering out loud if the CFPB will ever get organized enough to achieve any of its stated goals. 

New information suggests that maybe director Richard Cordray does have a plan.  Let’s tentatively call phase one of the plan, gathering information. Now, phase two: talent acquisition. 

The news that the CFPB has hired on University of Utah law professor Chris Peterson is a bad omen for short-term lenders. Peterson has been highly critical of payday loans. He has also voiced strong opinions against the MERS system that tracks mortgage ownership, but considering that the CFPB does not have jurisdiction over the business of big banks, you can bet that the CFPB is interested in Peterson’s take on payday lending. 

Ideally, government agencies should have a non-biased and fact-driven approach to their work. Does Peterson’s hire suggest that the CFPB is on the hunt, or are they simply interested in hearing his side of the story? While payday loan and cash advance products have been getting a lot of flak, it’s a fact that most customers have successful experiences and reach the goals they set when taking the loan. Very few customers, proportionately, get in trouble and end up extending their loans. Likewise, the vast majority or lenders are respectable and trustworthy businesses; while very few are selfish and greedy.

How will the CFPB reconcile the needs of millions, for the sake of the few? Aren’t we all individually responsible for our own financial decisions?