Supreme Court Recognizes Discrimination Hurts Entire Cities

An important ruling handed down by the Supreme Court today recognizes that when banks systematically discriminate against their customers, entire communities and cities are harmed.

Today’s decision rejects the claims of banks that racial discrimination against a city’s residents has no impact on the city itself. The lawsuit stems from the recent foreclosure crisis, and was brought by the city of Miami, which was hit particularly hard. As in other cities across America, neighborhoods where people of color live were disproportionately devastated. That can be largely attributed to the fact that Black and Latino homeowners received more expensive mortgages than their similarly creditworthy white counterparts.

Miami analyzed the data and realized that the lending of several banks discriminated against Miamians of color. For example, one bank was 1.5 times more likely to issue predatory loans to Black borrowers than similar white borrowers, and more than twice as likely to do so with respect to Latino borrowers, even among borrowers with high credit scores. Miami also realized that those discriminatory mortgages led to foreclosures, causing properties to lose value and the city to lose property tax revenue. So, Miami sued under the Fair Housing Act to get the banks to pay the taxpayers back.

The trial court dismissed the case based on the banks’ arguments that the city was not actually a victim of discrimination and that its injuries were too far removed from the actual discriminatory lending to claim monetary damages. The appeals court reversed that decision, finding that the city itself had a perfectly valid case because it had been injured by the discrimination and its injuries were foreseeable — meaning, the banks should have known their discriminatory mortgages would hurt the city as a whole.

The banks then asked the Supreme Court to review the decision, maintaining their claim that the FHA does not recognize a city’s injuries when its residents experience racial discrimination. The ACLU filed a brief with other civil rights groups arguing that the FHA exists to remedy community-level harms, as the Supreme Court has long recognized, and that municipalities and community organizations are therefore well-positioned to enforce it. Our brief also explains how residential segregation and discriminatory lending fuel each other — a cycle the FHA sought to end.    

The Supreme Court sided with Miami in a 5-3 decision that a city can bring its FHA claims to court when housing discrimination injures its bottom line. (Justice Neil Gorsuch didn’t participate in the decision.) Justice Stephen Breyer, writing for the court, echoed the argument of the ACLU and other civil rights groups that longstanding Supreme Court precedent gave the city a clear right to sue. The court then took issue with the test that the U.S. Court of Appeals for the 11th Circuit had used to determine whether the banks’ discrimination had “proximately caused” Miami’s injury. Today’s decision sends the case back to the appeals court so it can determine whether the causal relationship Miami described between the discrimination and the harm to its tax base is direct enough for the case to go forward.

By reaffirming older decisions that recognized cities have the right to sue when they have been injured by housing discrimination, the court’s action recognizes that entire communities — and not just individuals — are harmed by segregation and discrimination. With the FHA’s passage in 1968, Congress intended to dismantle these systems of discrimination, and this decision will help cities do that difficult work.

This decision is great news for the Fair Housing Act, which will remain an important tool for cities combatting discrimination. But it’s also great news for all of us hoping that, during uncertain times, our city governments can serve as a bulwark against those who would violate civil rights. Bank discrimination has kept Miami and its communities from being as strong and as inclusive as they could be. This ruling moves the city one step closer to holding the banks accountable to all Miamians for their discrimination.

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Low Income

I do not condone racisim in any form. However, it has always been true that the lower your income and credit score, the higher your interest payments.

Is the bank or car company responsible to give every customer the same rate? Nope, they use credit scores. Many "minorities" have lower credit scores because of lower income levels and credit defaults. I'm not saying all minorities are a bad credit risk, it just happens they have bad credit scores due to income and defaults.

Even the FHA and VA have credit limits. Look at their denial history and you find a majority of rejections are by minorities, and this was under Obama!

If you want to fix the system, improve the credit scores of minor ties by giving higher paying jobs and teaching credit/finance counseling in school.

Too many rely on the government run lotteries for their "future"

D. Powers

Did you miss this paragraph in the article?

"Miami analyzed the data and realized that the lending of several banks discriminated against Miamians of color. For example, one bank was 1.5 times more likely to issue predatory loans to Black borrowers than similar white borrowers, and more than twice as likely to do so with respect to Latino borrowers, even among borrowers with high credit scores. "

Miami

Ok, so at least Miami gave these people loans at all. They didn't have to. And as for predatory, does anyone remember 1982 when the average mortgage was issued at a 25% interstate rate or more for even the best qualified applicants? Thanks to Ronald Regan for ending this nightmare. People who couldnt qualify during the 80s where regulated to rentals only. While the landlords refinanced at lower and lower rates.

The issue is one of credit not race. I'm sorry that many minorities have bad credit. I can't control that, only they can.

William R. Dickson

You missed it again. "Similar white borrowers." They are taking credit scores into account in these comparisons.

Anonymous

The banks looked at a white borrower with a high credit score, a black borrower with a high/similar credit score and a Latino with a high/similar credit score. All three have similar/same income levels. The Non-white borrowers received a significantly higher mortgage rate than their white counter part. How is that NOT discrimination? How is that even remotely ok?

The City of Miami argued that when banks engage (Take part in) this kind of discrimination, it reduces property values because those with the higher rates are more likely to foreclose on their properties because they can't afford it. They can't afford it because the banks engaged in predatory lending practices that they would not have done to the similar situated white applicants. Since the City's housing crisis is based off those who can pay their mortgages and not leave the City with a bill for the property, the banks are responsible.

Low income

The court recorded evidence does not represent a statistical sample of banks. Less than 1/10th of a percent. Look it up.

Anonymous

"The court recorded evidence does not represent a statistical sample of banks. Less than 1/10th of a percent."

Good thing the City only sued two of them, then.

Gary Orfield

Communities have been deeply wounded by housing discrimination and it is important for the Supreme Court to recognize their powerful interest in a fair market for housing.

Too bad I'm white

I am white and was denied public housing because I make about $100 over the limit, even with my two kids. The lady that denied my paperwork was black and her boss Hispanic. Where is my racism case? They would say I don't qualify even though I know many "minorities" that were given waivers for income requirements. Don't point at one group because racism works both ways in this world.

SG

@Too bad I'm white -

White people have to meet the same income criteria as any other race when it comes to government assistance. The income limits aren't any different for you than anyone else - I assure you that black and Hispanic applicants are rejected every day for making slightly too much to qualify for public​ housing as well, and that it's equally frustrating for them.

Whether or not those requirements are too strict (for all applicants) is an entirely different question, especially in areas with higher than average costs of living.

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