THE LATEST: On June 21, 2023, three of the nation’s leading First Amendment legal scholars—represented by Democracy Forward—submitted a friend of the court brief to the U.S. Court of Appeals for the Seventh Circuit explaining that the First Amendment does not restrict the government’s ability to regulate discriminatory conduct, including in the financial services industry. The brief was submitted in Consumer Financial Protection Bureau (CFPB) v. Townstone Financial Inc. et. al., the latest effort by special interests to limit the CFPB’s ability to protect consumers. The scholars’ brief urges the Court to reject arguments that Regulation B (which implements the Equal Credit Opportunity Act (ECOA)) violates the First Amendment and reverse the District Court’s decision, which is currently being appealed. 

The scholars that submitted the brief are Genevieve Lakier, Professor of Law and Herbert and Marjorie Fried Teaching Scholar at the University of Chicago Law School; Amanda Shanor, Assistant Professor at the Wharton School of the University of Pennsylvania; and Rebecca Tushnet, Frank Stanton Professor of First Amendment Law at Harvard Law School.


The Consumer Financial Protect Bureau (CFPB) was created by Congress to provide a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial marketplace. One of its roles is to enforce federal non-discrimination laws that ensure that people are not unlawfully obstructed from seeking or receiving credit.  

On July 15, 2020, the CFPB filed a lawsuit in federal district court in the Northern District of Illinois against Townstone Financial, Inc., a nonbank retail-mortgage creditor and broker based in Chicago. The CFPB alleges that Townstone violated the ECOA; its implementing regulation, Regulation B,; and the Consumer Financial Protection Act (CFPA). Regulation B protects applicants from discrimination in any aspect of a credit transaction, and includes a prohibition on lenders discouraging applicants from pursuing a loan on the basis of race or other protected category. 

For years, Townstone drew almost no applications for properties in majority-African-American neighborhoods located in the Chicago metro area. The CFPB alleges that Townstone violated ECOA and Regulation B by, among other things, making statements during its weekly radio shows and podcasts that:

  • discouraged African-American prospective applicants from applying for mortgage loans; 
  • discouraged prospective applicants living in African-American neighborhoods in  Chicago area from applying for mortgage loans; 
  • and discouraged prospective applicants living in other areas from applying for mortgage loans for properties located in African-American neighborhoods in the Chicago area. 

We filed a brief to the U.S. Court of Appeals on behalf of First Amendment legal scholars to make clear that the First Amendment protects our right to speak, but it does not protect unlawful conduct and it does not save discriminatory lending practices.

Discrimination in the financial services industry persists and is often a barrier to people of color, women, and other communities marginalized by systems and structures fully and equitable participating in the economy and our democracy. Motivated by this, among many factors, Democracy Forward has a record of defending the CFPB’s ability to protect consumers from discrimination.

Key Filings: First Amendment Legal Scholars’ Brief