City Of Miami Asks U.S. Supreme Court For Right To Sue Big Banks
Can the city of Miami sue big banks that issued its residents predatory housing loans?
That question landed lawyers for the city of Miami in front of the Unites States Supreme Court Tuesday, making their case that before the Great Recession banks gave predatory loans to black and Latino residents in violation of the Fair Housing Act, costing the city money.
South Florida was one of the hardest hit areas during the recession and Miami wants to recoup some of its losses, filing suit in 2013.
Their argument goes: Because the banks gave predatory loans to individuals who were more likely to default and undergo foreclosures, surrounding property values decreased resulting in less property tax income and police and other resources being stretched thin to maintain these properties. All this came at the expense of the city.
This was not a product of the global financial meltdown, the city argues, but is the responsibility of banks like Bank of America, CitiGroup and Wells Fargo.
Any decision from the Supreme Court will not decide the case, but will answer questions about whether the city has standing to sue.
The 1969 Fair Housing Act is supposed to prevent discrimination for those renting, buying or financing a home, but a question remains: Does the act allow a city to sue or does that go beyond what Congress intended in the legislation?
The second question is whether the harm caused to the city, the loss of money, is related enough to the Fair Housing Act or is it only tangentially related.
Lower courts were deeply divided on the issue with the district court dismissing the city’s claims, while the U.S. Court of Appeals for the Eleventh Circuit reversed that decision.
Groups like the U.S. Chamber of Commerce are concerned about the consequences if the city of Miami wins its argument, opening the door for other cities to sue for “remote economic harms.“ The federal government, on the other hand, supports the city and says parties like a city are what help enforce the FHA.
“It was amazing to be here,” said Francis Suarez, a Miami city commissioner who sat in on the arguments. “I don’t think when we brought this case on behalf of residents, fighting for their dignity, we would get this far.”
He says the fact that the highest court took up the issue lends credibility to the case, which he takes as a vindication.
A decision will likely be announced next year.