U.S. | Tue Nov 8, 2016 | 11:51am EST

U.S. justices could allow Miami to sue banks over lending bias

By Lawrence Hurley | WASHINGTON

The U.S. Supreme Court on Tuesday indicated it could allow Miami to pursue lawsuits accusing major banks of predatory mortgage lending to black and Hispanic home buyers resulting in loan defaults that drove down city tax revenues and property values.

The eight justices heard arguments in appeals filed by Bank of America Corp and Wells Fargo & Co challenging a lower court's decision to permit the lawsuits by the Florida city against the banks. They were filed under the Fair Housing Act, a federal law outlawing discrimination in housing.

In September 2015, the Atlanta-based 11th U.S. Circuit Court of Appeals overturned a lower court's decision to dismiss such lawsuits by the city against Bank of America, Wells Fargo and Citigroup Inc. Citigroup decided not to appeal to the Supreme Court. If the court splits 4-4, the 11th Circuit ruling would stand and Miami would prevail.

Based on the questions asked by the justices, it appeared unlikely the banks would gain the five votes needed to win the case outright. But it was possible that a ruling for Miami could allow the lawsuits to move forward while narrowing the scope of the cases and potentially lowering the amount of damages the city could win.

Chief Justice John Roberts seemed most skeptical of the city's lawsuit. Fellow conservative Justice Anthony Kennedy, who could cast the key vote to avoid a 4-4 split, seemed somewhat sympathetic to the banks, particularly over the amount of damages they could face.

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