Supreme Court Allows Cities to Sue Banks of Potential Discriminatory Practices

Monday the Supreme Court ruled that federal the city of Miami can sue Wells Fargo & Co. (NYSE: WFC) and Bank of America Corp. (NYSE: BAC) for damages under the Fair Housing Act. The federal anti-discrimination law allows cities to sue a bank if the bank’s lending practices can be proven to be harmful to communities.

Miami is now in the forefront of a nationwide initiative by major cities to sue banks and lending companies under the Fair Housing Act. Previously banks have been sued by individuals, and have been taken fined by the government, but recent new cases are the first in which cities are now demanding responsibility for harming their local communities.

The harm to the communities cities are concerned about is related to the housing market. NPR reported that Miami accuses the banks of targeting African-American and Latino customers with predatory lending practices from 2004 to 2012 that led to foreclosures and vacancies in minority neighborhoods. In addition to frustrating the city's efforts toward racial integration, Miami says, the foreclosures prompted a number of negative effects, from crippling property values and tax revenues to putting a burden on the city to service blighted and unsafe properties.

“The housing market is interconnected with economic and social life. A violation of the FHA may, therefore, be expected to cause ripples of harm to flow far beyond the defendant’s misconduct,” Justice Stephen G. Breyer wrote. “Nothing in the statute suggests that Congress intended to provide a remedy wherever those ripples travel.”

The Washington Post also reported the remarks of Kristen Clarke, president and executive director of the Lawyers’ Committee for Civil Rights Under Law, who said, “Today’s Supreme Court decision reinforces the critical role that states and cities must play in holding banks and other actors accountable for actions that continue to harm communities, particularly minority communities that have borne the brunt of the crisis.”

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