SCOTUS says local cities can sue banks over predatory loans

In a ruling issued Monday; the Supreme Court of the United States (SCOTUS) said that local cities can sue banks for predatory loans and lending practices.  The decision from the SCOTUS stated that these local cities must prove in court that these loans led to damages such as a loss of tax revenue and increased expenditures on city services.  The case originated in Miami which pursued the case and a partial win for them.  Recently confirmed Justice Neil Gorsuch did not take part in the decision and the 5-3 decision was opposed by the courts SCOTUSmost conservative Justices (Thomas, Kennedy and Alito).

It wasn’t a total loss for banks over the predatory loans they issued because the cities will have to prove that the predatory loan caused the city a loss which is difficult to do (not impossible though).  The liberal Justices argued that the Fair Housing Act not only protected individuals but also communities as well.  Could this decision affect the way banks lend and the rates they provide to borrowers?  Potentially but we’ll have to wait and see.  

Anytime the banking industry loses a case like this it’s a possibility that banks will incur more costs when doing loans and when they do banks always pass it along to the consumer.  That being said; it wasn’t a complete loss for the banks and cities will have their work cut out for them with proving that the predatory loans hurt their cities revenue and increased their cost to operate.  SCOTUS heard oral arguments on the case last year on election day.