Under President Trump, the Consumer Financial Protection Bureau has dropped nearly a dozen enforcement cases brought during the Biden administration, ending lawsuits against banks and lenders for a variety of financial practices that the watchdog agency no longer considers illegal.
But on Wednesday, the bureau went a step further: It is seeking to give back $105,000 that a mortgage lender paid to settle racial discrimination claims last fall.
In an especially strange twist, the case — against Townstone Financial, a small Chicago-based lender — was brought during Mr. Trump’s first term by Kathleen Kraninger, the director he appointed to run the consumer bureau.
Russell Vought, who became the agency’s acting director last month, said it had “used radical ‘equity’ arguments to tag Townstone as racist with zero evidence, and spent years persecuting and extorting them.”
Mr. Sturner’s lawyers joined the consumer bureau in asking the federal court to vacate the settlement deal.
“Now we know that C.F.P.B. knew — or should have known — it had no case and targeted Townstone for its speech,” said Steve Simpson, a lawyer at the Pacific Legal Foundation who represents Mr. Sturner. “Justice demands that this settlement be vacated.”
The White House did not respond to a request for comment.
Christine Chen Zinner, a senior lawyer at Americans for Financial Reform, a progressive advocacy group, called the consumer bureau’s attempt to overturn the settlement “bananacakes.” The appellate panel’s unanimous decision that the fair-lending law applied was a clear signal that the case had merit, she said.
“Literally dropping the settlement sends a clear green light to businesses that discriminatory conduct is acceptable,” she said.
Norbert Michel, the director of the Center for Monetary and Financial Alternatives at the Cato Institute, a libertarian think tank, praised the consumer bureau’s about-face.
Citing the lawsuit’s focus on racial disparities between Townstone’s mortgage origination statistics and other lenders’, Mr. Michel wrote on social media, “Government agencies should not be in this business — and it is not accurate to call it regulation.”
