The presidential election was not the only major government activity happening in Washington, D.C. on Tuesday. The U.S. Supreme court heard arguments for the city of Miami’s lawsuit against Bank of America and Wells Fargo over redlining.
Miami alleges in its suit that the banks violated the Fair Housing Act when they “refused to extend credit to minority borrowers when compared to white borrowers,” then “when the bank did extend credit, it did so on predatory terms.” This, Miami claimed, caused these loans to go into foreclosure, causing the spread of blight, which in turn caused the city economic harm through lost tax revenue and through using its resources on combating the blight.
On Tuesday, lawyers for the banks contended that the sole purpose of Miami’s lawsuit was to regain what the city lost during the crisis, a charge that Miami’s lawyers denied.
“With respect to the 2008 financial crisis, if the 2008 financial crisis was, indeed, the purpose of this lawsuit, then the statute of limitations, which is two years, would have ended this lawsuit a long time ago,” said attorney Robert Peck, arguing on behalf of Miami.
Supreme Court Justice Elena Kagan, one of four Democratic justices on the court, leaned toward the city of Miami, noting that the under the Fair Housing Act, the city of Miami is considered an “aggrieved person,” stating, “This is their own interest in maintaining their communities free of the kind of racial discrimination that the Act says causes neighborhood blight.”
Justice Anthony Kennedy, a Republican justice who has often been the swing vote in 4-4 ties, asked if the city considered itself a victim of discrimination, since the monetary damages the city is seeking do not appear to be going to the residents who were allegedly harmed by the redlining.
Peck responded, “We are direct—a direct victim. . .we are suing for our own injuries,” also pointing out that in all three cases dealing with standing under the Fair Housing Act, direct and indirect damages are at issue. “Plaintiffs who are indirectly harmed are also harmed,” he said.
“But your injuries are derivative of the injury to the homeowners who had the subprime mortgages and who suffered the foreclosures and so on,” Chief Justice John Roberts responded. “You don’t start with you. I understand your argument that you’re down the line, but I don’t see how you can say that your loss of property taxes is a direct injury.”
The city of Miami’s lawsuit against the banks was originally introduced in a lower court in December 2011, alleging that each bank in question had participated in a decade-long pattern of discriminatory lending by targeting blacks and Hispanics for predatory loans. The suit was dismissed in July 2014 by a U.S. District Judge in Fort Lauderdale on the grounds that the city lacked standing to sue under the Fair Housing Act.
In September 2015, the 11th U.S. Circuit Court of Appeals reversed that decision and revived the suit, with Judge Stanley Marcus stating that “It is clear that the harm the city claims to have suffered has a sufficiently close connection to the conduct the statute prohibits.”
Click here to view the transcript of the oral arguments for Bank of America v. Miami and Wells Fargo v. Miami.