Cities, not just individuals, may now be able to sue banks over discriminatory lending practices, following a U.S. Supreme Court ruling Monday.
The court found the city of Miami is legally permitted to use the Fair Housing Act of 1968 to sue banks that allegedly issued risky mortgages to black and Hispanic borrowers at higher rates than other groups, the New York Times reported.
Miami is trying to sue Bank of America and Wells Fargo, arguing the city suffered financially because of the banks’ discriminatory lending practices. The city claims the methods of lending caused a high level of defaults by minority homeowners. Previously, banks have only been sued by individuals over lending practices, according to the Washington Post, and cities have not been the plaintiff in these types of cases.
“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 Breyer wrote in the decision. He was joined by Chief Justice John Roberts Jr. and liberal Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan.
However, the court did not issue a finding on the question of whether or not the city established a direct connection between the banks’ actions and the city’s financial losses. That matter will be decided by the federal appeals court in Atlanta, according to the Times.