Bogus Anti-Payday Loan Study Ignores "Facts" (Pt. 2)

Lawrence Meyers skewers Graves and Peterson’s work

This continues my look at Lawrence Meyers’ criticism of a misinformed hack piece parading as academic literature (he is more even-handed than I). CLICK HERE if you missed part one of this article.

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According to the National Credit Union Association, just how much overdraft and NSF fees does Self-Help Credit Union generate? That is the burning question, suggests Meyers. No doubt they can be proven to be truly dangerous, much more so than payday loans.

• “Payday loans of this sort have made the industry extremely profitable.”

Define “extremely profitable,” Meyers implores. Graves and Peterson make no comparison of payday loan business profits with those of other industries. They also fail to recognize the role that default risk plays when evaluating said profits. The authors’ omissions “demonstrate ignorance as to how to read basic financial statements and analyze basic business profitability metrics,” writes Meyers.

• “Consumers that..make little headway on their loan principals generate the vast majority of the payday lending industry's profit”

Wrong again, says Meyers. The report the study authors cite [Flannery; p.6] says that Flannery admits that evidence proving the above assertion is limited at best. But Flannery does say that “46.9 percent of store revenues come from frequent borrowers (not rollovers).” Since when has 46.9 percent qualified as a “majority?” ... click here to read the rest of the article titled "Bogus Anti-Payday Loan Study Ignores "Facts" (Pt. 2)"