An American Civil Liberties Union (ACLU) discrimination lawsuit, filed earlier today against investment bank Morgan Stanley, underscores that the open sore caused by subprime mortgages in black and brown communities remains wide open.
The class-action lawsuit, submitted in a federal court a stones throw from the New York Stock Exchange, alleges that Morgan Stanley intentionally steered blacks in the Detroit metropolitan region into subprime loans. Blacks who were credit-worthy and qualified for traditional mortgages were caught up in Morgan Stanley’s biased dragnet.
Acting through their now-bankrupt financial agent, New Century Mortgage Company, Morgan Stanley pressured loan agents to bring in African Americans through a range of incentives. The suit claims that New Century borrowers were “significantly more likely to receive (subprime) loans and thus to suffer the harms…if they were African American.”
Of course they were. This is not new.
4 out of 10 of the over 9 million foreclosures since 2007 have been black and Latino. The loss of property on such a massive scale has led to the largest collapse—and lowest level of wealth—in these communities ever recorded. The Wall Street land grab in communities of color is worldwide.
Race was laced throughout Wall Street’s activities.
The Justice Department has settled two lending-discrimination lawsuits against Bank of America and Wells Fargo totaling a half a billion dollars in the last twelve months but true justice lingers.
Not one person on Wall Street has gone to jail over the subprime mess, despite what the federal government’s official report on the mortgage crisis calls “fraud” on a massive scale. Moreover, there has been no system-wide fix to address the real financial and emotional damage done to families as a result.
Until that happens, it will be up to organizations like the ACLU to soldier on.