The Consumer Financial Protection Bureau (CFPB) said Wednesday it is seeking to give back a $105,000 settlement it received last fall from mortgage lender Townstone Financial to end a racial discrimination charge.
CFPB has asked the U.S. District Court of the Northern District of Illinois to vacate the settlement that the bureau had made with the Chicago-based mortgage lender and that the court had approved in November.
In an unorthodox move, Russell Vought, the acting director of the bureau who took over soon after President Donald Trump was elected, maintained that the CFPB was the one in the wrong. He said in a statement that the lender had agreed to the settlement after the CFPB had launched “a seven-year harassment saga” against Townstone.
“CFPB abused its power, using radical ‘equity’ arguments to tag Townstone as racist with zero evidence and spent years persecuting and extorting them.” Vought said, according to the statement.
Vought also said that the CFPB did this to “further the goal of mandating” diversity, equity and inclusion in lending.
The CFPB, which was launched to protect consumers from financial fraud, is in the process of being dismantled by Vought and the Trump administration, which has repeatedly said the bureau should be closed. CFPB employees have recently been told to stand down and do no work. The new leadership says the agency has been unfairly aggressive against various financial players, including mortgage companies and other members of the housing industry.
That has led the Trump administration to drop nearly a dozen enforcement cases since taking office, according to The New York Times.
The cases dismissed include a recent charge against Capital One, which just prior to Trump being inaugurated was accused by the CFPB of using deceptive methods to obtain $2 billion from its customers. The bureau dropped that case in late February.
The case against Townstone Financial was actually first brought by the CFPB in 2020 during Trump’s first term. The bureau had accused Townstone of breaking fair-lending laws by discouraging Black prospective applicants from applying for mortgage loans with the lender. In the initial complaint, the bureau maintained that Townstone did this by making several statements over time on their long-form commercial radio broadcast, The Townstone Financial Show.
According to the 2020 complaint, the hosts of the radio show would regularly make disparaging statements about predominantly Black areas of greater Chicago that would discourage Black prospective applicants. Townstone lawyers say the lender was targeted for its constitutionally protected speech and that there was no evidence of discrimination on the part of Townstone.
