Slams Townstone Financial for Discriminatory Lending Practices in Chicago

“The agency is doing what they’re supposed to do, which is to center consumers from across this country.”

Video (YouTube)

WASHINGTON – Today, at a House Financial Services Committee hearing, Congresswoman Ayanna Pressley (MA-07) praised the Consumer Financial Protection Bureau (CFPB) for its essential work protecting consumers and highlighted the agency’s crackdown on redlining practices as evidence of why the CFPB is sorely needed.

In the hearing, Rep. Pressley slammed Townstone Financial for its racist and discriminatory lending practices against Black consumers in Chicago, and applauded the CFPB for taking action against the company.

A full transcript of her exchange with witnesses is available below and full video is available here.

Transcript: Pressley Praises CFPB at Hearing, Highlights Agency’s Crackdown on Redlining
House Financial Services Committee
March 9, 2023

REP. PRESSLEY: You know in today’s hearing on the Consumer Financial Protection Bureau, we should really be praising the work of the agency and discussing how to augment its successes for consumers all across our country.

I want to thank you, Attorney General Ellison for joining us and for doing exactly that.

Without question, under Director Chopra’s leadership, the agency has taken action on junk fees, medical debt, appraisal equity, and held bad actors accountable for their greed, exploitation, and illegal behavior.

Unfortunately, my colleagues on other side are busily trying to criticize the agency and to undermine its mission.

There is a particular case that CFPB brought that has been raised in this hearing and the primary focus of legal arguments. It is the lawsuit against Townstone Financial in Chicago.

Ms. Thompson, you are here on behalf of Pacific Legal Foundation which represented Townstone Financial, correct?

MS. THOMPSON: Yes, ma’am.

REP. PRESSLEY: And according to your testimony, the origins of CFPB’s suit was regarding redlining. For the record, since there has been a lot of banter about definitions, what is the precise definition of redlining?

MS. THOMPSON: The CFPB does not have a precise decision of redlining.

REP. PRESSLEY: I’ll elucidate youto the definition. According to the Legal Information Institute, redlining is a discriminatory practice that consists of the systematic denial of services such as mortgages, insurance loans, and other financial services to residents of certain areas based on their race or ethnicity.

The history of the term dates back decades to when lenders would literally draw a red line around neighborhoods to stop Black people from moving in as a way to maintain segregation.

Today, this practice is not as overt, but it still persists. And, again, not as overt since the passage of the Civil Rights legislation, so instead of a map and a red marker, discriminatory lenders often discourage applicants by using racially coded language.

Ms. Thompson, before I go further, can you confirm that Townstone used marketing services through radio ads and a weekly radio show, yes or no?

MS. THOMPSON: Yes, Townstone marketed through—

REP. PRESSLEY: Reclaiming my time.On the radio, Townstone repeatedly disparaged Black neighborhoods in Chicago. While I don’t have enough time to go through all of their statements, I will share a couple for the record.

The mortgage company described the South Side of Chicago between Friday and Monday as – quote – hoodlum weekend.

On another occasion, Townstone described a grocery store in a Black neighborhood as a jungle.

I can’t even call these dogwhistles because they are as blaring as a bullhorn. These racist messages were loud and clear for everyone to hear. And it borne out in the data.

In a city as racially diverse as Chicago, where 30% of the population is Black, only 1.4% of Townstone loan applicants were Black. And less than 1% of applications were for properties in Black neighborhoods.

This is modern-day redlining plain and simple. And that’s why the CFPB brought the lawsuit against Townstone.

Now today I have the honor of representing Massachusetts in the House of Representatives but I was raised in Chicago. I know the city well, and I, for one, am glad that the agency took action against discriminatory lending practices. We need more, not less, of the CFPB.

On a final note, I want to address the suggestion that the agency is rooted in political bias.

Ms. Thompson, who was the president in 2019 when CFPB brought that lawsuit against Townstone?

MS. THOMPSON:  That was President Trump.

REP. PRESSLEY: And if you don’t know who was the Deputy Director of the CFPB when the lawsuit was filed, I’ll give you a hint: he’s the Republican witness sitting two seats down from you, Mr. Brian Johnson.

MR. BRIAN JOHNSON: May I correct the record, Congresswoman? I departed the bureau in March, March 6 of 2020.

[As confirmed by Ms. Thompson in her testimony, the CFPB action against Townstone began in 2019, while Mr. Johnson was Deputy Director.]

REP. PRESSLEY: Reclaiming my time. Again, Donald J. Trump was the president and there’s no political bias happening here. The agency is doing what they’re supposed to do, which is to center consumers from across this country.

Attorney General Keith Ellison, in these final moments, I want to give you a chance to add or correct anything for the record that has been previously stated.

ATTORNEY GENERAL ELLISON: I’ll make a few notes. First of all, I want to thank you for laying out the record on Townstone. That was brilliant and important for the record.

I think that there is more than ample oversight of the CFPB to annual presentations by the leader of that institution, numerous report requirements, a number of appearances.

When I was when I was on the committee that you’re on now, ma’am, we heard from them all the time. That is oversight. And this idea that they’re unaccountable makes no sense. We’re having accountability right this second.

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