Investigative timeline as alleged
Upon reviewing documents, Bishop stated that the CFPB lacked sufficient factual evidence to justify the lengthy investigation of Townstone. He also accused agency lawyers of misleading superiors and being biased against the owner’s viewpoints.
The investigation reportedly began after the CFPB ran a “redlining screen” on data submitted through HMDA, leading to suspicions of discriminatory lending practices. Allegations were made that Townstone’s owner promoted mortgages to low-income applicants and had no African-American loan officers.
The use of audio analytics software to analyze a radio show hosted by the company was deemed problematic, with only a small fraction of the content being flagged as offensive. This raised concerns about the bureau’s conduct.
Claims were made that bureau staff were determined to continue investigating the company’s views on race and racism, citing a need for deterrence in cases of discrimination. The investigation allegedly revealed evidence of discriminatory remarks from the radio show.
Alleged misstating of enforcement guidance
Bishop argued that the bureau’s memo misrepresented regulations under Regulation B and failed to provide evidence of specific harm caused by the radio show’s remarks. Questions were raised about the appropriateness of race-conscious remedies in the case.
In response to the allegations, Townstone submitted a comprehensive court filing that included evidence refuting the claims of discrimination. Despite this, the CFPB investigators reportedly dismissed the evidence and continued to pursue the case.
Following a legal battle, a federal judge ruled in favor of Townstone, but the CFPB vowed to appeal the decision. This led to a reaffirmation of the bureau’s authority under ECOA by a three-judge panel.
Where things could go next
Sterbcow emphasized the need for increased oversight of the CFPB to prevent abuse of power and political agendas. He called for structural reform within the agency to ensure fairness and impartiality in enforcement actions.
He anticipated congressional hearings on the matter and emphasized the importance of proper assessment of new evidence in the case. Sterbcow highlighted the need for the CFPB to operate without bias and to avoid using regulation as a tool for political purposes.