Philadelphia is suing Wells Fargo for what it calls predatory lending in violation of the Fair Housing Act of 1968. The lawsuit comes two weeks after the U.S. Supreme Court ruled that cities can sue banks that may have targeted minorities with bad loans.
The city’s lawsuit, filed in the U.S. District Court in Philadelphia, says Wells Fargo purposefully pitched high-risk loans to black and Latino borrowers, though their credit enabled them to apply for better loans. The lawsuit says Wells Fargo was aware of this imbalance, and even encouraged employees to take advantage of it. The claims are similar to those made by Miami, which the U.S. Supreme Court ruled earlier this month could proceed with its lawsuits against banks for targeting minority customers.
Like Philadelphia’s lawsuits, Miami alleged that banks unfairly targeted minority borrowers with bad loans. Then after the financial crisis, these customers, and even entire communities, saw unequal rates of foreclosure. Miami filed its lawsuits in 2013 against Bank of America and Wells Fargo, saying their discriminatory lending caused undue financial harm on the city, increased segregation, and lowered property values. The Supreme Court’s decision was important because while similar lawsuits have been made by individuals, or small groups of people, this is the first time a city representing entire communities has sued under the FHA. By siding with Miami, the court essentially ruled that cities can be regarded as people under the FHA.