The Consumer Financial Protection Bureau, a federal bureaucracy with a vast jurisdiction, is testing a novel approach to crime and punishment. In a lawsuit against Townstone Financial, a small Chicago-area nonbank mortgage firm, the CFPB is signaling that it may attempt to punish anyone who complains about neighborhood crime.
The CFPB accuses Townstone owner Barry Sturner and others affiliated with the company of making “statements that would discourage African-American prospective applicants from applying for mortgage loans.” The suit, filed in 2020, doesn’t provide any concrete examples of consumers that Townstone has allegedly mistreated. Rather, the CFPB points to a handful of statements Mr. Sturner and other company officials made over a four-year period on the Townstone Financial Show—a weekly radio program and podcast. These statements, according to the regulatory behemoth, discourage “prospective applicants, on the basis of race, from applying for credit.”
The CFPB’s action against Townstone is concerning for many reasons. Chief among them is the lawsuit’s blatant attempt to apply antidiscrimination laws to speech made to a general audience in a mass-media venue rather than to individual customers or employees in a workplace. The Pacific Legal Foundation, a public-interest law group representing Townstone, warns in a legal brief that this approach to enforcement “would arrogate to the CFPB the authority to censor speech.”
The foundation and other attorneys for Townstone have argued in federal court that the CFPB’s action violates the First Amendment right to free speech and exceeds the agency’s authority under the Equal Credit Opportunity Act. In February, federal Judge Franklin Valderrama in the Northern District of Illinois dismissed the CFPB’s suit, ruling that the law prohibits only discrimination against actual applicants, not discouragement of prospective applicants. Undaunted, the CFPB filed to appeal the decision on April 3.
Among the statements highlighted in the lawsuit are Mr. Sturner’s descriptions of frequent weekend crime rampages on Chicago’s South Side as the work of “hoodlums” and his claim that police are keeping the city from “turning into a real war zone.” The CFPB also wags its finger at a host’s description of a Chicago suburb as an area in which “you drive very fast through” and “you don’t look at anybody or lock on anybody’s eyes.”
The CFPB contends that these statements about majority-black communities would somehow “discourage prospective applicants living in majority- or high-African-American neighborhoods from applying for mortgage loans.” Yet the Townstone hosts’ candid comments about the crime epidemic in Chicago’s black neighborhoods are remarkably similar to recent statements of Mayor-elect Brandon Johnson.
Despite Mr. Johnson’s past association with the “defund the police” movement, he spoke openly in his campaign about the effect of crime on Chicago’s neighborhoods. In a March 16 debate with Paul Vallas, Mr. Johnson described Austin—his own West Side neighborhood—as “one of the most violent neighborhoods in the entire city.” In his April 4 victory address Mr. Johnson said he’d shielded his children “from bullets that fly right outside our front door.”
In speaking honestly about the problem of crime, Mr. Johnson was voicing the frustrations of nearly everyone in Chicago. In a March poll conducted by Northwestern University’s Center for the Study of Diversity and Democracy, 53% of black respondents and 50% of whites cited crime as their most important issue. This might explain why the CFPB failed to locate any individual consumer offended by Townstone’s candid talk on the matter. The law-abiding citizen discouraged from applying for a loan by a mortgage professional calling out neighborhood “hoodlums” exists only in a CFPB bureaucrat’s imagination.
Read the full article at The Wall Street Journal.