Mayor Emanuel joins forces with new federal agency to protect consumers
BY FRAN SPIELMAN City Hall Reporter firstname.lastname@example.org December 5, 2012 2:57PM
Mayor Rahm Emanuel announces new reforms that will protect working families from financial scams and bad practices in the Department of Business Affairs and Consumer Protection office in City Hall. Wednesday, December 3, 2012. I Brian Jackson~Sun-Times
Updated: January 7, 2013 7:17AM
Mayor Rahm Emanuel joined forces with a new federal agency Wednesday to protect Chicago consumers against financial scams tied to payday, small dollar loans and student loans, reverse mortgages and home repair scams.
Chicago will become the nation’s first major city to forge an information-sharing agreement with the U.S. Consumer Financial Protection Bureau that will allow the feds to move in quickly when patterns of financial fraud arise.
At next week’s City Council meeting, Emanuel also plans to introduce three new ordinances that will strengthen the city’s hand against financial predators.
The first would use new zoning regulations to limit the proliferation of payday lenders, auto-title loan stores and other financial services that can drag down neighborhoods and credit scores by triggering spikes in crime, foreclosures and bankruptcy.
Another ordinance would license and regulate debt collectors and force them to abide by rigid guidelines. The third ordinance would give the city’s Department of Business Affairs and Consumer Protection the “teeth” it needs to take action against businesses convicted of violating state and federal consumer protection acts.
Emanuel said the information-sharing agreement has the potential to better protect consumers.
“We’re here in Chicago seeing a slight spike in reverse mortgages. Having this relationship will allow us to work with the consumer protection office to make sure that does not become epidemic,” he said, noting that reverse mortgages are primarily used by senior citizens.
The mayor noted that the first sign of consumers being “overrun by the financial industry”— whether in credit cards, mortgages or student loans — shows up in local markets.
“Having fought desperately to create this [federal] office, I would say this is a breath of fresh air. He’s only gonna be as good as the information he’s getting at the local level. When there’s starting to be a flashing yellow light or smoke come out, that is gonna be an indication to literally snuff out something before it’s scaled up nationwide,” Emanuel said.
Richard Cordray, director of the Consumer Financial Protection Bureau, said the information sharing agreement could trigger “joint enforcement” on reverse mortgages and other abuses.
He pointed to the mortgage crisis and foreclosure epidemic that followed to underscore his contention that mounting individual debt can “suck the vitality out of” an entire community.
“Vacant properties become not only eyesores but magnets for drugs and crime, and they lower property tax revenues. If the properties turn into a dead loss and have to be leveled, you know who pays for that. When neighbors see their own property values decline, entire neighborhoods suffer and cities are forced to bear the bottom line costs of problems created by others,” Cordray said.