WASHINGTON–In another move that rolls back earlier actions, the CFPB has moved to vacate 2024 it had reached with a company it alleged had violated the Equal Credit Opportunity Act and its Regulation B, calling it a ”harassment saga.”

The Consumer Financial Protection Bureau (CFPB) said it is looking to vacate the settlement it reached with Townstone Financial Inc., saying it wants to “right a wrong” against the firm.

In 2020, the CFPB sued Townstone Financial alleging redlining. Although a federal district court had previously dismissed the case against Townstone, in 2024 the Seventh Circuit Court of Appeals reversed that decision and found in favor of the Bureau in a decision that expanded the Equal Credit Opportunity Act (ECOA) to include protections for prospective applicants who may be discouraged from applying for credit.

In taking its action the CFPB had alleged Townstone discouraged prospective African-American applicants from applying for mortgages in the Chicago metropolitan area through derogatory statements made in podcasts and radio shows, various media report stated. Following the appeals court decision, the CFPB reached a settlement with Townstone that required it to pay a $105,000 penalty to the CFPB’s victims relief fund.

As the CU Daily report separately, the CFPB said it is rolling back its rules around redlining. 

Attempt to ‘Destroy’ Firm

But now, under Acting Director Russell Vought, the CFPB described the earlier settlement as “harassment,” stating in a released statement that the CFPB had used a “redlining screen” based on an arbitrary number of mortgages, and set out to “destroy a small Midwest firm with about 10 employees and a radio program called Townstone Financial.”

“After a thorough review, the CFPB is seeking to make Townstone whole by returning the six-figure penalty they were forced to pay,” CFPB said.