News: In the News

Supreme Court clears the way for cities, including L.A., to sue banks over foreclosure crisis

by: David G. Savage

The Supreme Court expanded the reach of federal housing law Monday, ruling that cities — including Los Angeles — can sue major banks for discriminatory lending practices that hurt low-income neighborhoods during the Great Recession.

The decision gives city leaders a potentially powerful weapon against lenders, including those who were accused of predatory practices that triggered the foreclosure crisis after 2008.

Until now, these legal claims faced an apparent obstacle. The Fair Housing Act forbids racial discrimination against “any person.” Lawyers for the banks said the law protected only people who suffered discrimination, not cities.

But by a 5-3 vote, the justices said cities can be an “aggrieved person” who can sue over the impact of housing discrimination on the city’s finances. Justice Stephen G. Breyer cited rulings from the 1970s that interpreted the civil rights law broadly, including by allowing city officials to sue real estate agents who were turning away black and Latino home buyers.

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