Cordray Pledges to Work with Mayors, Cities to Protect Consumers
Council on Metro Economies and the New American City Launches 2012 Agenda
By Dave Gatton
January 30, 2012
Richard Cordray, newly appointed Director of the Consumer Financial Protection Bureau (CFPB), pledged to "join forces" with mayors to protect the public against predatory lenders and other financial crimes against consumers, in remarks to the Conference of Mayors Council on Metro Economies and the New American City, January 18 in Washington (DC). The council is chaired by Columbus (OH) Mayor Michael Coleman.
Cordray told the Council, "We need to do this work together." He said the bureau would work with mayors to establish an early alert system to identify financial scams, particularly in non-bank financial sectors such as mortgage brokers and payday institutions.
Coleman welcomed Cordray, saying, "This Conference strongly supported the creation of the CFPB and the appointment of Richard Cordray as its director." Coleman continued, "Consumers are our residents, and we now have someone to work with to advance the cause of consumer protection."
Referencing the mortgage foreclosure crisis, Cordray said that individual problems often become community problems and that cities bear the bottom line cost on problems they did not cause. But he also defended the role of responsible businesses, saying that when we protect the consumer, we support responsible businesses that play by the rules.
He indicated that the bureau was launching a "Know Before You Owe," program to educate consumers on responsible mortgage practices and credit card agreements. The bureau will also organize consumer response teams to address consumer complaints.
Mayors will now be able to refer such resident complaints about lending practices to consumerfinance.gov, the bureau's website.
Cordray also praised the Conference of Mayors financial education program, DollarWi$e — Mayors for Financial Literacy Campaign, and said he looked forward to hearing what financial education programs worked best at the local level.
Mayors asked a variety of questions of Cordray, ranging from the ballooning student loan debt that now approaches the level of credit card debt in the country, to cyber crime against seniors, to predatory interest rates when loan payments are a day late.
Cordray's appointment was controversial when President Obama appointed him during the holiday Congressional recess. The CFPB could not begin implementation of several of its programs until a director had been appointed.
Vacant, Abandoned Properties
The Council then heard from Jim Rokakis of the Ohio Land Conservancy on the development of a program to create "qualified urban demolition bonds" modeled after tax credits used for school construction. "We are overwhelmed by the problem of vacant and abandoned properties that destroy property values and are crime magnets," he said. "There are more vacant properties in Ohio and Michigan than post-Katrina." Rokakis proposes that the bond program be funded from set-asides from bank settlement funds that may result from settlement talks currently underway between banks and the attorneys general.
Robert Klein, Chairman of Safeguard Properties, the nation's largest property preservation firm, told the mayors that moving properties that were abandoned to quicker resolution would avoid the asset from further deterioration. "In some places it takes two to three years to complete the foreclosure process, and I will guarantee you the property will deteriorate, get vandalized or attract criminal activity during that period, " he said. He referred to draft model legislation to address property resolution for abandoned properties that is being prepared by Rokakis for introduction in the Ohio legislature.
Home Buyers, Mortgages
Former FHA Commissioner and current President of the Mortgage Bankers Association, David Stevens, summarized regulatory proposals that would require 20 percent down payments, and certain loan'to-value ratios that were currently being considered as a result of the Dodd-Frank financial reform law. "This will dramatically restrict the middle class from access to the mortgage market," he told the mayors. Cerritos Mayor Carol Chen responded that the regulatory "pendulum" was swinging too far in the opposite direction and was denying access of legitimate home buyers to the market."
Holly Moskerintz, Director of Employer Assisted Housing at the National Association of Realtors, presented "best practices" on how the non-profit and business sectors were developing programs to assist employees in the home buying process. Working with the Council and mayors, NAR will set up educational forums in cities to encourage home ownership.
Jobs, Growth Strategies
Martha Moore, representing the American Chemistry Council, briefed the mayors on the role of the chemical industry in future job growth. She indicated that the industry generated 800,000 high-paying manufacturing jobs with an average salary of $82,000, 43 percent higher than the average U.S. manufacturing salary. The chemical industry in 2011 reached $200 billion of exports, a new record; and is making investments that will lead to 17,000 new direct jobs resulting from value-added chemistry products using sources of ethane from shale gas. Those jobs will create an additional 80,000 jobs for suppliers and another 85,000 from additional household spending, bringing the total job impact to 182,000 new jobs.
Mary Kay Leonard, CEO and President of the Initiative for a Competitive City (ICIC), announced a joint research initiative with the Council to identify job growth strategies in inner cities. Inner city areas are defined as those with 20 percent or higher poverty rates. Such areas account for 0.1 percent of the nation's land mass, but 31 percent of the nation's minority poverty. Between 1998 and 2008, regions surrounding inner cities experienced job growth of six million, while inner city areas lost 300,000 jobs. Leonard told the mayors that educational and medical institutions were the largest employers in 66 of the largest 100 inner cities.
Norm Jacknis of Cisco commented that the Council would continue to identify demonstration projects that linked economic growth with internet connectivity. "We know that the U.S. is behind the rest of the world in internet connectivity," he told the mayors, "but this is true even among U.S. cities." He cited a University of Michigan study that concluded the most viable U.S. city economies were those most "connected" to the global economy.