US Supreme Court Gives Green Light To Miami To Sue Big Banks For Predatory Lending

May 1, 2017

The U.S. Supreme Court ruled Monday that the city of Miami can sue some of the nation’s largest financial institutions over allegations that predatory lending practices in minority communities violated the Fair Housing Act and contributed to a real estate meltdown that nearly bankrupted the city.

The high court, by a 5-3 decision, said the city has standing to sue banks that elected leaders blamed for a wave of foreclosures that undercut Miami’s tax base in the late 2000s. The city, which was forced to patch a more-than $100 million budget shortfall following the real estate bust of 2008, sued Wells Fargo, Bank of America, JPMorgan Chase and CitiGroup in 2013.

A trial judge tossed the lawsuits in 2014, and that decision was overturned by the U.S. Court of Appeals for the 11th Circuit. On Monday, six months after hearing oral arguments on cases brought by Wells Fargo and Bank of America, the high court vacated sided with the city.

And yet, the justices also vacated the portion of the 11th Circuit’s ruling that the city had sufficiently argued that the banks’ activities can be blamed for the city’s financial problems on the basis that the fallout should have been foreseeable. They directed the court to reassess that issue.

“The remaining question is one of causation: Did the Banks’ allegedly discriminatory lending practices proximately cause the City to lose property-tax revenue and spend more on municipal services?” asked Justice Stephen Breyer.

Reasd more at our news partner, the Miami Herald