Miami is taking Bank of America, Wells Fargo, and Citigroup to court under the 1968 Fair Housing Act, and the banks are going to the Supreme Court to try to stop it.
The Washington Post reports that Miami is trying to recoup losses from the recession. The city says banks used discriminatory and predatory lending practices, alleging that they directed Hispanic and African American residents into high-interest, risky loans. The loans led to defaults, which resulted in a loss of tax revenue that nearly bankrupted Miami.
The banks say that the Fair Housing Act was never intended to be used this way, and that the suit could lead to chaos. Anyone in a neighborhood in decline could then sue under the act.
Banks have been sued by individuals and taken to task by the federal government for lending practices, but these new cases are the first in which cities are the plaintiffs and are demanding that banks be held accountable for harming their communities.
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