Trump CFPB Reverses Townstone Discriminatory Lending Settlement
Latest corporate pardon returns public money paid due to egregiously racist conduct
By Christine Chen Zinner
In an astounding first, the Trump-appointed leadership of the Consumer Financial Protection Bureau has requested that a federal court reverse a racial discrimination settlement that the agency had previously reached with Townstone Financial, a Chicago-based mortgage lender.
Townstone had settled a clear cut case of redlining stemming from allegations that it had refused to serve Black neighborhoods in Chicago, areas the CEO referred to using egregiously racist language. Russell Vought, the acting CFPB director, not only asked the court to reverse the settlement, he returned the monetary settlement the company had paid for violating civil rights laws against racial discrimination in housing and mortgage lending.
Never mind that the previous Trump administration filed the initial case against Townstone, or that a panel of all Republican-appointed judges at the Seventh Circuit Court of Appeals sided with the CFPB in a 3-0 vote. Vought cited this case as an example of how the “CFPB abused its power, us[ing] radical ‘equity’ arguments to tag Townstone as racist with zero evidence.”
How is this for “zero” evidence? Townstone conducted its business almost exclusively in majority-white neighborhoods, with little to no lending in Chicago’s majority-Black neighborhoods. Only 1.4 percent of Townstone loan applicants were Black, and less than 1 percent of applicants were for properties in Black neighborhoods, even though 30 percent of Chicago residents are Black. Townstone was a clear outlier; it did far less lending in the South Side than other firms.
And, there was a mountain of other evidence of racial bias on top of the statistical evidence sufficient to prove violations of the Equal Credit Opportunity Act (ECOA). Townstone hosted a radio show that regularly discouraged prospective Black customers from applying for mortgage loans.
Let’s go to the tape: On the Townstone Financial Show the co-host CEO, Barry Sturner, referred to a Jewel-Osco supermarket in the South Side as the “Jungle Jewel” that he called a “scary place” with shoppers “from all over the world.” On another show, a loan officer described skydiving as the same type of “rush” as someone “walking through the South Side at 3 AM.” Majority-black areas were disparaged as a “hoodlum weekend,” “crazy,” and “a real war zone.”
Congress passed ECOA and other civil rights and fair lending laws to address long-standing structural racism in residential housing. Nearly 50 years after the passage of the Fair Housing Act, such as redlining (refusing to loan in Black and Brown neighborhoods) and mortgage discrimination (rejecting loan applications from people of color) continue to create barriers to homeownership for Black, Latine, and Indigenous families.
The historical disinvestment, lower homeownership rates, and lower levels of economic activity in segregated neighborhoods are associated with lower income levels, lower educational attainment levels, and lower household wealth. And yet, Vought thinks audiotape documentation of racist rants and robust statistical evidence of ignoring Black neighborhoods constitutes “zero” evidence.
This action by CFPB is depressingly and terrifyingly consistent with the Trump administration’s onslaught against civil rights laws and enforcement. Abandoning this case is what rolling back civil rights laws looks like: an administration that goes out of its way to pardon discriminatory lending violations after a settlement was reached. Congress created the CFPB to fight lending discrimination and protect people from abuse by financial predators like Townstone.
The Trump administration attacks on the CFPB are designed to let loose the worst predatory and racist practices. We should all stand up against these repellent attacks on decency, equality, and the rule of law.
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