It is great to be back in Chicago, this fascinating city of so many unexpected dimensions, where I spent my law school days.
My own public service roots were planted firmly in local and state government in Ohio.
From my experience in state and local government, I have found that strong partnerships are sometimes difficult to build, but always the best way to get things done. So I especially appreciate the announcement we are making here today.
Chicago is the first city in the country to agree to share information directly with us, the new Consumer Financial Protection Bureau, about enforcing the laws that ensure people are treated fairly in the confusing and complex consumer financial markets.
We want to learn from and expand on the ways you protect consumers, and to share these approaches nationwide.
We also want you to be able to take advantage of the new resources we bring to the arena, including strong analytical tools and a broad mandate to protect consumers against illegal practices.
Every day, millions of Chicagoans use financial products with the goal of achieving prosperity through hard work and sound decisions.
Mortgages allow families to invest in a home and pay for it over time. Credit cards give us convenient access to our money when we need it. Student loans make it possible for people with ambition and drive to finance an education and brighten their future.
But, as the past few years have revealed all too clearly, if these products are misused, then they also have the potential to wreak havoc on consumers and the wider economy.
Debt can devastate people’s lives. Individual financial problems then become community problems.
We saw that quite clearly with the mortgage crisis. The foreclosure epidemic sucked the vitality out of once-vibrant neighborhoods.
Vacant properties are not only eyesores, but can become magnets for drugs and crime, and they also lower property tax revenues as they decline in value.
If these properties turn into a dead loss and have to be leveled, you know who pays for that? Of course, the city has to do that.
When neighbors see their own property values decline, entire neighborhoods suffer, and cities are forced to bear the bottom-line cost of problems created by others.
In this manner, predatory lending exhibits what my economics training at the University of Chicago would denote as “externalities.” That is a sterile academic term, but the upshot is that predatory lending hurts more than its immediate targets; it assaults the very foundations of stable communities. The damage can take years and years to repair.
The Consumer Bureau was created to ensure that such irresponsible and illegal practices do not continue to plague our lives and our communities.
Partnerships like this one are at the heart of our efforts to improve how consumer financial markets work for people. You are on the frontlines, and we are glad to join you there and partner with you as a new federal agency focused exclusively on in consumer financial protection.
We want to know what you are seeing and how that informs what we should be doing—where our supervision and enforcement teams should focus their attention, and what problems our policymakers should undertake to fix.
We need to do this work together, and to promote responsible business practices.
When honest businesses prosper, communities can flourish and so will America’s economy.
We have already begun our work to enforce the law against unfair, deceptive, and abusive acts or practices.
We are launching brand-new federal supervision of payday lenders and debt collectors and credit reporting companies. Because of your close relationship with your constituents, you have a unique ability to help us spread our reach more broadly.
By working in partnership, we can succeed in educating, empowering and protecting our citizens. They deserve to have someone standing on their side.
At the Consumer Financial Protection Bureau, we look forward to teaming up with you to do just that.