According to the CFPB's announcement, the bureau has filed a Joint Rule 60(b) Motion for Relief from and Vacatur of the Stipulated Final Judgment and Order, along with a supporting memorandum and a declaration from Senior Advisor Dan Bishop. The press release said the bureau is "seeking to make Townstone whole by returning the six-figure penalty they were forced to pay."
The Townstone matter, according to the release, centered on what the bureau now describes as perceived racial disparities in mortgage application and origination statistics at the firm, which the bureau described as having about ten employees and a radio program. The CFPB said its investigation began with a "redlining screen" that initially flagged 22,000 companies before being narrowed through "qualitative research."
"CFPB abused its power, used radical 'equity' arguments to tag Townstone as racist with zero evidence, and spent years persecuting and extorting them – all to further the goal of mandating DEI in lending via their regulation by enforcement tactics," Vought said in the release. "The more we uncover at CFPB, the more we see how this agency was weaponized against targeted Americans."
Bishop, in the same release, called the prior enforcement action "a flagrant misuse of government resources to destroy a small business that did nothing wrong." He added, "For the crime of protected political speech, this firm was targeted and harassed for years by this rogue agency. We are righting this wrong and protecting the First Amendment."
The bureau said its underlying statistical case rested on what it now characterizes as an "agency-defined 'shortfall' of just 31 applications from 'majority-minority' areas, out of 876 total applications in a three-year period." The release said CFPB staff had reviewed Townstone's radio and podcast content with audio-mining software and flagged 16 minutes out of nearly 79 hours as "disconcerting."
The release also quoted Townstone's owner, speaking to the Washington Free Beacon: "They twisted innocuous statements about crime into something nefarious and then tried to use it to ruin my reputation and destroy my business." The owner added, "When a federal agency with an unlimited budget and army of lawyers comes after your business and smears you as a racist, you're forced to give in and take it or choose an uphill fight."
According to the CFPB, internal agency lawyers had calculated potential penalties of $28,906 per day over four years, or $42,202,760, for the alleged civil rights violations. The bureau said it is now asking the court both to refund the monetary penalty and to dismiss the case.