This week the Consumer Finance Protection Bureau (CFPB), an agency founded by Senator Elizabeth Warren to confront the predatory financial activity that led us into the housing crash of 2009, walked back on its mission. Project 2025 co-author and Acting CFPB Director Russell Vought vacated an enforcement action against Townstone Financial over the lender’s flagrant racism.
This wasn’t a case of free speech, as Vought claimed in announcing the decision. It was the result of careful analysis of Townstone’s own lending data – combined with public comments made by its CEO, Barry Sturner.
In one case, as HousingWire summarizes, “Sturner spoke of going to a grocery store in downtown Chicago by saying he ‘(had) to go to the Jewel on Division. … We used to call it ‘Jungle Jewel.’ There were people from all over the world going into that Jewel. It was packed. It was a scary place.'”
The Jewel grocery at 412 Division Street offers a history lesson on formal and informal discrimination. Cities have long used a complex system – legal, financial and social – to enforce segregation. Groups considered “undesirable” were pushed into the most neglected parts of the city. That meant immigrants, religious minorities and most of all Black Americans.
The neighborhood surrounding that grocery was given an economic death sentence in the middle decades of the 20th century, by the White, wealthy men who ran the institutions behind the racist policy of intentional deprivation known as “redlining.”
The Home Owners Loan Corporation (HOLC), a Depression-era agency designed to buy distressed mortgages, worried about the risk of these loans. So they mapped cities, meeting with local power brokers – almost all White men – to decide which neighborhoods were “safe” for investment and which should be avoided.
When the guys in charge at HOLC looked at the part of town where the Jewel grocery now operates – dubbed “D30” in HOLC records – they decided that “a continued infiltration” of the area by “the Negro population” meant that the neighborhood “has no future.” That was not true, of course – until HOLC staff decided to enforce their own prophecy by redlining the area, ensuring loan capital would not flow to it and stymieing local participation in the economy.
They weren’t subtle. These Residential Security Maps categorized neighborhoods explicitly based on race and ethnicity. In the final years of HOLC, the Federal Housing Administration (FHA) took over and doubled down, redlining neighborhoods across the country for the next 30 years.
The HOLC explanation for its redlining of the area is alarming to the modern eye for many reasons – and for the purposes of the Townstone case, remarkable for how nearly they mirror the slanders Barry Sturner aimed at the area in 2017:
“The section has no future and that portion south of Division St. is very definitely blighted. … [the] Negro population is largely concentrated south of Division St., and west of Wells St., but a continued infiltration of this race has caused an overflow north of that point; and it is reasonable to assume that the section may eventually become more negro than Italian, which is the other predominating population class residing in this section today.” – HOLC Records
Whether he knew it or not, Sturner was reinforcing the redlining logic of a century ago – signaling that communities marked on a map as “undesirable” remain off-limits for lending. But he wasn’t just talking. He made sure his firm enforced the same divisions the HOLC imposed 40 years prior. From 2007 to 2017, Townstone Financial’s lending patterns showed clear and persistent gaps in service to Black, Hispanic and working-class communities.
The data tells the story:
- In 2007, just 2.26% of applicants at Townstone were Black, and only 3.34% were Hispanic. At peer lenders, those figures were 12.27% and 13.88%, respectively – both differences statistically significant.
- In 2008, only 6.85% of Townstone’s refinance loans went to low- and moderate-income (LMI) borrowers, compared to 29.47% for peers – a 22-point gap.
- From 2009 to 2011, the trend held. In 2009, Townstone’s Hispanic applicant share was 1.59% versus 6.32% among peers. In 2011, LMI lending was 6.20% at Townstone vs. 26.76% for peers.
- The pattern continued through 2012–2015. In 2014, LMI borrowers made up just 4.80% of Townstone’s refinance loans, while they represented 24.50% of loans at comparable institutions.
- In the final years of CFPB’s review, 2016–2017, Townstone remained out of step. In 2017, only 1.39% of its refinance applicants were Hispanic, and just 0.88% were Black – compared to 8.56% and 7.29% at peer lenders.
The disparities weren’t isolated incidents – they defined how the company operated.
Sturner’s on-air comments tell us this was not unintentional, but a mandate for the firm as a whole: Don’t loan to the “scary” people in their “scary” neighborhoods.
This is how redlining replicates and reinforces itself over time – unless regulators and communities step in to disrupt the cycle. Prior CFPB leadership attempted to do just that – and the people currently attempting to gut the agency just declared that punishing intentional and knowing racism in lending is something they oppose.
Sturner’s perceptions of Black Chicago are shaped by his personal memories and experiences, which in turn were shaped by decades of both official and unofficial redlining, as well as racially motivated violence. To begin reversing the damage done by redlining, cities need accessible and easy-to-understand public data that allows communities, policymakers and advocates to take informed action.
But public data can only show so much. The CFPB, with its access to detailed, non-public data, is the only entity capable of connecting the dots between individual loan officers and the systemic denial of credit. This is why a strong, independent CFPB is essential.
Because without it, people like Barry Sturner will keep steering credit away from the same neighborhoods redlined a century ago based on their fear of them. And the families who live there will continue to be denied the opportunity to build wealth, buy homes and escape the cycles of disinvestment that the government once designed – and that some lenders are still all too eager to enforce.
Jason Richardson is NCRC’s Senior Director of Research.
Photo of HOLC redlining map via Mapping Inequality
