The City of Chicago and the Consumer Financial Protection Bureau will join forces to crack down on the city’s non-bank lenders.
In the first information sharing agreement between a city and the CFPB, Chicago has agreed to share information about scams involving pay-day lenders and other financial institutions with the CFPB. The deal is just one aspect of broader actions taken by the city to combat predatory lending.
The city will target non-banks with new ordinances to regulate and license debt collectors, as well as implement new zoning regulations to limit the proliferation of payday lenders and auto-title loan stores, the city said in a press release.
A partnership with the city is one step in the CFPB’s overall program to supervise non-bank lenders. “We are launching brand new federal supervision of payday lenders and debt collectors and credit reporting companies,” CFPB Director Richard Cordray said at a press conference with Chicago Mayor Rahm Emanuel on Dec. 5. “Because of your close relationship with your constituents, you have a unique ability to help us spread our reach more broadly.”
Partnerships with cities are the latest avenue through which the CFPB has sought to extend its information network. And Cordray has indicated the CFPB will continue to look for partnerships with cities throughout the country, according to the American Banker.
These partnerships could be a turning point for a project that has brought more failure than success for the CFPB. Earlier this year an information sharing agreement with the state attorneys general stalled; four Republican AGs even joined a lawsuit which has challenged the constitutionality of the Dodd-Frank Act. But now, in addition to the City of Chicago, the CFPB added an information sharing agreement with the Department of Justice on Dec. 6. And the mayor of Columbus, Ohio already has indicate interest in a similar partnership.