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  • The Consumer Financial Protection Bureau has asked a federal judge to vacate a settlement with Townstone Financial and return $105,000 to the mortgage firm accused of redlining.

  • The CFPB’s chief legal officer, Mark Paoletta, and attorneys for Townstone filed a joint motion for relief Wednesday to vacate the final judgment and order issued in November in the U.S. District Court for the Northern District of Illinois.

  • “CFPB abused its power, used radical ‘equity’ arguments to tag Townstone as racist with zero evidence, and spent years persecuting and extorting them – all to further the goal of mandating DEI in lending via their regulation by enforcement tactics,” Acting Director Russ Vought said in a statement.

Since the new administration has taken over, the CFPB has dropped nine lawsuits that the agency brought on behalf of consumers. In February, it dismissed its lawsuit against Capital One, after the Biden-era iteration of the CFPB accused the bank of misleading consumers about a savings account product. It has also dismissed cases against JPMorgan Chase, Bank of America, Wells Fargo and SoLo Funds. 

“The more we uncover at CFPB, the more we see how this agency was weaponized against targeted Americans,” Vought said.

The case against Townstone was brought by former CFPB Director Kathleen Kraninger, an appointee from President Donald Trump’s first term. 

The CFPB claimed it found “significant undisclosed problems” with the bureau’s treatment of this case that resulted in “unmerited investigation and litigation” and violated the defendants’ First Amendment rights of free speech.

The CFPB accused Chicago-based Townstone of discouraging residents living in majority-Black neighborhoods from applying for mortgages in the city’s metropolitan area through its comments made on its radio show and podcast. In a June 2016 episode of the Townstone Financial Show, the company’s CEO, Barry Sturner, described Chicago’s South Side between Friday and Monday as “hoodlum weekend” and suggested that police are the only barrier preventing it from becoming a “real war zone.” 

The South Side is a majority-Black area, with roughly 489,000 African-American residents. 

The CFPB said the agency had pinned down 16 minutes of the program’s nearly 79 hours of radio content that they considered “disconcerting” and inappropriate.