Last month Richard Cordray argued that payday lenders charge exorbitant fees and often trap consumers in a cycle of debt.
On Wednesday, the director of the Consumer Financial Protection Bureau sat silently as a room full of the industry's customers and employees argued that Americans should be allowed to make their own borrowing choices.
Wearing stickers that read "My Credit … My Decision," dozens of payday loan supporters packed into a public meeting of a board that advises the CFPB.
The scripted part of the meeting, held in downtown Los Angeles, barely touched on payday lending, but the public comment portion was dominated by the industry's backers.
"I could write a book on how many times I've helped customers with their bills," said Alex Vargas, who identified himself as an employee of a payday lender.
Payday loans are often a cheaper option than overdraft fees, said Craig Wells, president of Cash Plus, a payday lender. A bank might charge $80 in overdraft fees for what amounts to a $100 loan, he noted, while a payday lender would charge $17.
"The reason that demand is so high is that they've figured out that $17 is less than $80," Wells said sarcastically. "Please don't take away the options."
That comment and other similar lines drew applause from the audience, as Cordray and other bureau officials sat stone-faced on stage. On Thursday, the agency's Consumer Advisory Board was scheduled to discuss payday loans and similar products that are offered by banks, but that session was to be held behind closed doors.
Last month the consumer agency issued a report that it called perhaps the most comprehensive study ever on short-term, small-dollar lending. The report found that payday borrowers often roll over into new loans before they can fully pay off their old debts.
"What we have found is that too often consumers are getting caught in a revolving door of debt," Cordray said at that time.
Last month's report followed a February call to action on payday lending by the agency's Consumer Advisory Board, the same panel of finance and consumer experts who met Wednesday in Los Angeles.
The CFPB report hinted that the bureau may support measures — which already in the process of being implemented for banks that offer similar loans — that would sharply curtail payday lending.
Potential restrictions include a requirement that loans be underwritten based on the borrower's ability to repay them and mandatory cooling-off periods between the repayment of one loan and the issuance of another.
A couple of commenters at Wednesday's meeting voiced support for those kinds of limitations.
"Studies show that 90 days is the minimum needed to repay the short-term, small-dollar loans," said Andrew Chang of the Center for Asset Building Opportunities, a Los Angeles community organization.
But many more speakers took the other side of the issue.
"I do urge you that you not demonize these alternative financial institutions," said Erick Verduzco-Vega of the South Bay Latino Chamber of Commerce, arguing that payday lenders allow consumers to take control of their financial lives.
Edgar Enciso described himself as a payday loan customer who has used short-term credit to get through school. "I just want to share how grateful I've been that I've been able to get these payday loans," he said.
Many of the industry's supporters came to Wednesday's meeting as part of an organized group. No one was paid to attend, according to Greg Larsen, spokesman for the California Financial Service Providers Association, a trade group that represents payday lenders, who also in the audience.
The format of the meeting did not allow for give-and-take between CFPB officials and the audience, but their voices were heard by those on stage.
"From our public comments, it's very clear that there is a need for small-dollar, short-term loans," Zixta Martinez, the CFPB's associate director for external affairs, said at the end of the session.