The U.S. Supreme Court has ruled, by a 5-3 majority, that the city of Miami was authorized to bring lawsuits based on allegations that banks engaged in financial-crisis-era discriminatory lending. The city alleged that the banks had intentionally and disproportionately issued risky mortgages on unfavorable terms to minority borrowers. That led, the city said, to segregation and foreclosures, resulting in falling property values and damage to its property tax base.

The Court ruled that the Fair Housing Act conferred standing on the city to sue the banks because Congress had meant to include cities among the "aggrieved parties" who can assert claims under the law. The city will have to establish that the banks caused direct harm to the city, which may be a very difficult standard to meet. The Court has remanded the case back to the appellate court to review whether the banks' alleged misconduct has a "direct relation" to the injuries alleged. That decision will determine whether the lawsuit can ultimately go forward. Several other local governments in Illinois, Georgia, and California are pursuing similar claims against mortgage lenders.