A federal judge in Chicago has rejected a request by the Consumer Financial Protection Bureau (CFPB) to vacate its $105,000 settlement of redlining charges brought against the mortgage lender Townstone Financial.
The settlement followed a protracted litigation that began in 2020 under the first Trump administration and concluded last November under the Biden administration. The CFPB claimed Townstone actively discouraged potential mortgage applicants because of their race or the racial composition of where they lived or sought to live between 2014 and 2017. However, in March the CFPB did an abrupt reversal by stating it “set out to destroy” the company “solely on perceived racial disparities in mortgage application and origination statistics. That disparity? An agency-defined “shortfall” of just 31 applications from ‘majority-minority’ areas, out of 876 total applications in a three-year period.”
The agency also noted the company was allegedly targeted for hosting a radio show that discussed “local crime, political issues around freedom of speech, supporting local law enforcement, and telling people to check out a neighborhood before buying a home.” The CFPB added there was no evidence that potential Townstone customers found the radio show’s contents offensive or discriminatory.
Reuters reports US District Judge Franklin Valderrama, a Trump appointee, questioned the CFPB’s insistence that its original case against Townstone was without merit, claiming that reversing the settlement was “an act of legal hara-kiri that would make a samurai blush.”
“At bottom, to grant the motion based on the arguments advanced by the parties would be to undermine the finality of judgments,” Valderrama said. “That is a Pandora’s box the court refuses to open.”
Separately, the CFPB faced another setback with the Federal Reserve’s inspector general launching a review over the Trump administration’s attempted downsizing of the agency. CNBC reports the review followed complaints filed by Sens. Elizabeth Warren (D-MA) and Andy Kim (D-NJ) over the administration’s attempt to lay off most of the CFPB’s employees and cancel the agency’s contracts.
“We had already initiated work to review workforce reductions at the CFPB” said Acting Inspector General Fred Gibson in a letter. “We are expanding that work to include the CFPB’s canceled contracts.”
Photo by Adam Fagen / Flickr Creative Commons
The Trump administration is attempting to undo gains made by the CFPB that protect consumers and the public from predatory practices. The gutting of the CFPB will harm consumers across the nation.
The CFPB responds to complaints, investigates, and if the complaints are supported by evidence of illegal business practices, then further legal action is taken. This has resulted in many court wins and settlements that returned over-charges and other damages to consumers.