Guest post by Jim Hawkins, University of Houston Law Center
In reading Gary Kalman's guest post, I wondered
why the Center for Responsible Lending (CRL) doesn't take a more nuanced approach to lending issues like payday
lending. The report linked to in the post makes categorical statements about
the effects of payday lending without acknowledging that many people think the
evidence is indeterminate. It says, for instance, that payday loans cause
bankruptcy, without mentioning the facts that (1) Tobacman and Skiba's work
says payday loans don't increase the chances of people filing for Chapter 7 (only
Chapter 13) and that (2) there are serious critiques of their claim. Also, the
report cites economic studies that report negative findings about payday
lending and none of those that find the opposite. John Caskey's excellent paper echoes Jeff Sovern's point that we just don't know what the net
welfare effects of the loan are. To me, I have a harder time taking the CRL
work seriously because it does not acknowledge the other side. Maybe it is the
difference between academic work and advocacy, but even as a matter of persuasion,
I'd be more persuaded if it appeared more objective. (All that said, I love a
lot of the work CRL does!)
