Civil Rights and Consumer Protection Groups Urge Court to Reject the Trump Administration’s Unprecedented Attempt to Abandon Redlining Settlement with Townstone Financial, Inc.
FOR IMMEDIATE RELEASE:
Civil Rights and Consumer Protection Groups Urge Court to Reject the Trump Administration’s Unprecedented Attempt to Abandon Redlining Settlement with Townstone Financial, Inc.
Trump 2.0 Administration Reverses Course on Redlining Settlement In Case Initiated by Trump Administration 1.0
Washington, D.C. – Today, a coalition of civil rights and consumer protection groups led by the National Fair Housing Alliance® (NFHA™) and represented by the Public Citizen Litigation Group filed an amicus brief in federal district court opposing the unprecedented motion filed by the new leadership of the Consumer Financial Protection Bureau (CFPB) to undo the CFPB’s own redlining settlement with the mortgage company Townstone Financial, Inc. The lawsuit against Townstone, which alleged that they discriminated against Black consumers in Chicago, was developed and ultimately filed in 2020, by the Trump Administration (1.0) based on evidence that Townstone redlined Black communities and discouraged applications from Black applicants. The CFPB alleged that, between 2014 and 2017, only 1.4% of Townstone’s loan applications came from Black applicants, and less than 1 percent of its applications came from majority Black neighborhoods – both figures far lower than those of its peers in the Chicago-area lending market. The CFPB also alleged that, on its radio show/podcast, Townstone made disparaging comments about Black people and predominantly Black neighborhoods. After losing its case before a three-judge panel of the Seventh Circuit Court of Appeals – all appointed by Republican Presidents — Townstone voluntarily entered into a consent decree to resolve the case and pay a monetary penalty of $105,000.
Last week, the current Trump Administration (2.0) and Townstone jointly asked the court to vacate the 2024 settlement agreement and refund the money Townstone paid as a penalty for violating the law. The only basis asserted for this drastic request is a claim that, after reviewing the casefile from 2020, they believed Townstone was targeted because its owner, Barry Sturner, made disparaging remarks about Black people and Black communities during a radio show he hosted to market his lending company. The current CFPB leadership is claiming this violates Sturner’s free speech rights and the first Trump administration should not have initiated the action—a rationale that is unprecedented and extreme, allowing every new administration to unwind final judgments in cases where they disagree with the outcome. Today, a coalition of civil rights and consumer protection groups filed an opposition to that motion.
Lisa Rice, President and CEO, released the following statement:
“We are stunned the Trump Administration is undoing its own work by reversing a consent decree it once pursued to uphold anti-discrimination laws and fair lending standards. Now the façade has fallen and the administration is no longer making any attempt to conceal its contempt for civil rights and consumer protection. This Administration is signaling in every way that it will not protect Black people and other People of Color from discriminatory conduct. This unconscionable reversal is the latest in a series of steps the Trump administration has taken to weaken and undermine longstanding protections and unleash an era of anti-civil rights and anti-consumer policies empowering bad actors to discriminate. It has attacked its own employees, private corporations, universities, and law firms, and now it is even attacking its own prior work. These actions leave people exposed with no mechanism for accountability or enforcement.
Since its founding in the wake of the 2008 financial crisis, the Consumer Financial Protection Bureau (CFPB) has protected everyday people, particularly America’s most vulnerable consumers, including People of Color, seniors, students, veterans, and low-wealth families. The agency has returned over $21 billion to millions of consumers who were victimized by fraud, abuse, and discrimination and created rules to protect people from predatory financial institutions. And it has provided a critical bulwark against redlining, a particularly egregious form of lending discrimination that excludes whole communities from credit on the basis of race or other protected classes. At least the first Trump administration acknowledged that redlining was a serious injustice that deserved attention. Now the administration is publicly walking away from its own prior position.
As we have seen time and again, when bad actors are left to police themselves, the consequences are damaging and destructive for underserved people and communities. After being held accountable for its discriminatory conduct before an independent judiciary, including an appellate court, Townstone has found a friendly audience with a politically-motivated CFPB. This is a dangerous moment for people in America, fair lending enforcement, and the ability of agencies to stand by their enforcement powers. We sincerely hope justice will prevail and the district court will recognize the impropriety of this unprecedented action and decline this dangerous motion.”
A copy of the filed amicus brief can be found here.
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The National Fair Housing Alliance (NFHA) is the country’s only national civil rights organization dedicated solely to eliminating all forms of housing and lending discrimination and ensuring equal opportunities for all people. As the trade association for over 170 fair housing and justice-centered organizations and individuals throughout the U.S. and its territories, NFHA works to dismantle longstanding barriers to equity and build diverse, inclusive, well-resourced communities.