City Governments and Predatory Lending

This Article assesses the legal challenges that cities can face in trying to deal with predatory lending. Part I provides an overview of the problem. Part II focuses on the common law and statutory claims that cities might bring, with particular emphasis on the evidentiary isses that cities can face and the requirements of standing that could severely limit the effectiveness of lawsuits brought by municipalities. The Article then turns to city efforts to regulate predatory lending pursuant to their home rule authority, efforts than can be stymied both by state laws that supersede municipal ordinances and federal regulations that preempt state and local initiatives.

Part III focuses on home rule, explaining that most courts that have addressed the question have held municipal initiatives to be preempted by state laws. Part IV shows that the federal government might override much of what cities and states try to do to attack the problem. The Article concludes that, despite the legal obstacles facing cities that want to regulate predatory lending, local efforts have served as a catalyst for predatory lending policies at the state level and might stimulate more effective national policies as well.