Despite the settlement, the company has refused to take accountability.
As BLACK ENTERPRISE previously reported, some investment firms in Chicago have been engaging in shady business practices with Black people. Now, the Consumer Financial Protection Bureau (CFPB) is stepping in to protect Black people from discrimination.
According to Reuters, Townstone Financial, who had been embroiled in a long-running lawsuit with the CFPB, settled with the watchdog organization on Nov. 1 over discrimination claims.
According to Pacific Legal Foundation attorney Steve Simpson, “This case should never have been brought.”
In a statement on their website, the conservative legal group that represented Townstone said that they bowed out solely because of the superior resources of the CFPB.
The CFPB, meanwhile, was positioned by the U.S. Seventh Court of Appeals to have more room to combat racial discrimination in lending as well as loan marketing.
According to a press release issued by the CFPB, its Director Rohit Chopra cautioned that the organization will continue to use its resources to stand against discrimination.
“The CFPB’s lawsuit against Townstone Financial included a major appellate court victory that makes clear that people are protected from illegal redlining even before they submit their application. The CFPB will continue to prosecute those who engage in modern-day redlining,” Chopra said.
According to the decision that Chopra alluded to from the Seventh Circuit Court of Appeals, “an analysis of the text of the ECOA as a whole makes clear that the text prohibits not only outright discrimination against applicants for credit, but also the discouragement of prospective applicants for credit.”
According to the CFPB, Townstone’s advertising campaigns, marketing and business practices worked in concert to discourage Black people from applying for credit and also actively avoided servicing Black neighborhoods in the Chicago metro area.
According to Circuit Judge Kenneth Ripple, a Ronald Reagan appointee, it is clear that Congress intended for the Equal Credit Opportunity Act to end discrimination in loan applications across the board.
“The term ‘applicant’ cannot be read in a crabbed fashion” to exclude discouraged applicants, Ripple wrote in his decision affirming the powers of the CFPB. “Congress well understood that ‘any aspect of a credit transaction’ had to include actions taken by a creditor before an applicant ultimately submits his or her credit application.”
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Source: Black Enterprise
