Zuckerberg said the CFPB was “looking into us” even though “we’re not a bank.” He speculated that the CFPB’s inquiries were part of a Biden administration attempt to jawbone Meta into censoring content on its platforms. Andreessen, in an earlier episode, accused the CFPB of “terrorizing anybody who tries to do anything in financial services” if the person is from a politically disfavored industry or expresses a viewpoint with which progressive politicians disagree.
In response, CFPB defenders deny that it punishes particular industries or viewpoints. Focusing on debanking, the process by which disfavored industries or individuals lose access to financial services, these boosters have maintained that the CFPB has nothing to do with this practice and is even fighting it.
Yet evidence shows that the powerful financial regulator has weaponized enforcement against specific industries and viewpoints. For instance, the CFPB did play a key role, according to a report from the Federal Deposit Insurance Commission’s inspector general, in the Obama-era Operation Choke Point. Under this regime, banks were pressured to deny services to industries ranging from firearms to payday loans.
Even more disturbing, for the past few years, the CFPB has wielded its enforcement authority over housing discrimination to effectively censor speech with which it disagrees. Specifically, in its misapplied discrimination litigation against Chicago-based nonbank mortgage firm Townstone Financial, the CFPB sought to penalize expressions of widely held views decrying neighborhood crime.
In its lawsuit against the firm, 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.” Yet the lawsuit fails to name a single black applicant who felt “discouraged” and does not even target Townstone’s communication with individual black applicants. Rather, the CFPB contends that Townstone created a discriminatory atmosphere through statements made on the firm’s weekly radio show and podcast, the Townstone Financial Show.
The CFPB wags its finger, for instance, at Sturner saying it was “hoodlum weekend” on Chicago’s South Side due to the area’s high levels of crime. It recoils at a co-host’s description of a Chicago suburb, depicted as an area where “you drive very fast through” and “you don’t look at anybody or lock on anybody’s eyes.” And it shakes its head at Sturner arguing that police are “the only ones” keeping city neighborhoods from “turning into a real war zone.”
The CFPB proclaims in its lawsuit that these statements about majority-black neighborhoods somehow “discourage prospective applicants living in majority- or high-African-American neighborhoods from applying for mortgage loans.” Yet, as we wrote previously in the Wall Street Journal, the Townstone officials’ candid comments about crime aren’t much different from remarks made by Chicago’s left-wing mayor, Brandon Johnson. Last year during the mayoral campaign, Johnson described Austin, his own West Side neighborhood, as “one of the most violent neighborhoods in the entire city.” In his victory address, Johnson spoke of shielding his children “from bullets that fly right outside our front door.”
Even as the case received national attention and generated criticism from free speech advocates, the CFPB refused to back down. After mixed verdicts in court rulings that never reached the First Amendment concerns, Townstone and the CFPB settled just before the presidential election in November 2024.
In the settlement, Townstone admitted no liability for violating laws such as the Equal Credit Opportunity Act, but the CFPB still fined the firm $105,000. And in a news release celebrating the settlement, CFPB Director Rohit Chopra proclaimed that “the CFPB will continue to prosecute those who engage in modern-day redlining.”
Chopra’s statement equating Townstone officials’ remarks about crime with “modern-day redlining” indicates that the CFPB, under his leadership, will continue to act as a weaponized censor. If nothing is done, the CFPB will continue stretching laws to punish disfavored speech.
Given the Townstone precedent, the speech targeted by Chopra’s CFPB in the future could include words communicated not just to individual consumers but to a general audience on an entrepreneur’s podcast or social media account. The CFPB misbrands such speech as a form of discriminatory lending, despite no apparent harm to borrowers.
President Donald Trump, who made protecting free speech a key campaign promise, must do everything he can to stop the CFPB’s censorship crusade. He should start by removing Chopra immediately, as allowed by the Supreme Court’s ruling in Seila Law and following the precedent set by the Biden administration in its tendering the resignation of Kathy Kraninger on the former president’s first day in office, even if Chopra digs in his heels and refuses to go.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Once Trump’s own nominee for the CFPB is confirmed, this new director should fire everyone involved in bringing the case against Townstone on the grounds of abusing authority and violating the Constitution. The new director should also take the unusual but warranted step of rescinding the Chopra CFPB’s fine against Townstone for merely exercising its free speech rights and perhaps provide compensation to the firm for the disruption of its business.
The Trump administration and the new Congress must do everything they can to end the weaponization of financial rules and attempts at censorship by financial regulators.
John Berlau is the director of finance policy at the Competitive Enterprise Institute and author of George Washington, Entrepreneur. Stone Washington is a research fellow at the CEI.
This article was originally published at www.washingtonexaminer.com
