According to the American Banker, payday lenders have a ‘few friends in high places,’ at least as it relates to the recent KC Fed discussion.

In particular, KC Fed economist Kelly D. Edmiston found evidence that, in states that ban or restrict payday loans, consumers have lower credit scores and make less use of traditional credit.

“I’m arguing that they either lose access to credit, or are using less healthy forms” of short-term borrowing, such as bounced checks, overdraft loans or even illegal loan sharks, says Edmiston.

…

Sharing the debate panel with Frank and with Darrin Anderson, an executive from payday lender QC Holdings, Edmiston defended his research, pointing out that the results were not intended as an argument against bans but as a starting point for discussions on payday loan restrictions, which he says haven’t been examined enough. “The evidence is mixed,” he says with a shrug.