In a historic ruling, today a judge gave us the green light to move forward with a case alleging that Morgan Stanley discriminated against black homeowners in the Detroit area in violation of the Fair Housing Act ("FHA").
"Morgan Stanley—as a loan purchaser and mortgage securitizer—falls within the scope of the FHA and as such, the FHA prohibits Morgan Stanley both from discriminating in 'making available' real-estate related transactions as well as discriminating 'in the terms or conditions of such a transaction,' Judge Harold Baer wrote in his opinion.
The 2008 housing collapse affected all corners of America, but was especially devastating to African-Americans. Since the Great Recession, the wealth gap between black and white Americans further widened, erasing economic gains made possible by the civil rights laws of the 1960s. But the silver lining is that those same civil rights laws make it possible for black homeowners—including our five individual plaintiffs—to hold big banks accountable for their role in promoting predatory lending. And the judge today took an important first step in proclaiming that Morgan Stanley is not above the law.
This is the first step in a long battle. But today, our clients got a closer to holding Morgan Stanley liable for its role supplying high-risk loans issued in neighborhoods that were particularly vulnerable to economic ruin.
The lawsuit, which the ACLU and co-counsel brought on behalf of the homeowners, is the first to connect racial discrimination to the securitization of mortgages. It is also the first case where a prospective class of homeowners who suffered discrimination is suing an investment bank rather than the subprime lender who issued their mortgages. Morgan Stanley was the principal financier of the now-defunct New Century Mortgage Corp., and it orchestrated New Century’s focus on dangerous loans that placed many homeowners on a path to foreclosure. The judge noted that “Detroit’s recent bankruptcy filing only emphasizes the broader consequences of predatory lending and the foreclosures that inevitably result.”
Rubbie McCoy, a plaintiff in the case, is among those who saw her world shattered by the predatory loans. She describes how her mortgage broker guided her toward a predatory New Century loan, placing her home and family’s well-being in jeopardy. McCoy, a single mother of four, has experienced firsthand the devastation that banks like Morgan Stanley have wrought upon largely African-American and Latino neighborhoods, where huge swaths of once-occupied homes now stand abandoned and stripped.
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Rubbie’s story is unfortunately not unique. She is just one of the many people of color in the United States who saw their lives shattered by discriminatory business practices on Wall Street. This lawsuit uses the Fair Housing Act, a vital law forged during the civil rights era, to make sure the American dream doesn’t discriminate against any Americans today.
Now, this groundbreaking case is moving forward, creating impetus for the Department of Justice to finally hold other big banks accountable for financing illegal and discriminatory lending practices. We are calling on the Department of Justice to bring investigate whether other Fair Housing Act claims are available to hold other Wall Street banks accountable.
For more information about the case go to: /racial-justice/adkins-et-al-vs-morgan-stanley
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Press ReleaseDec 2024
Racial Justice
ACLU Statement on House AI Task Force ReportACLU Statement on House AI Task Force Report
WASHINGTON — Today, the House Task Force on Artificial Intelligence (AI) issued its final report, marking an important step in recognizing the serious risks of discrimination and bias posed by AI systems — particularly in law enforcement’s use of facial recognition technology. The report recognizes that discrimination and bias may arise in AI systems due to their design, training data, or failures by end users. The report also investigates the complex considerations around deepfakes, open AI systems, and free speech, and urges Congress to pass narrow legislation to address concrete harms. In response to the House AI Task Force final report, Cody Venzke, senior policy counsel at the American Civil Liberties Union, issued the following statement: “The ACLU commends the Task Force for recognizing that AI systems are harming people right now through discriminatory outcomes and supercharged surveillance. Curbing those abuses of AI is not a partisan issue, and more concrete action is needed to protect civil rights, while maintaining states’ authority to build on those protections. The Task Force is appropriately cautious when wrestling with issues around deepfakes, open-source AI, digital identity, and other issues, recognizing that legislators should consider a wide array of tailored tools to address real, not speculative, harms while respecting civil rights and civil liberties.” The House Task Force on Artificial Intelligence report can be found here. -
News & CommentaryDec 2024
Racial Justice
Human Rights
Why the Fight for Racial Justice is a Human Rights IssueWhy the Fight for Racial Justice is a Human Rights Issue
On International Human Rights Day, the ACLU is advocating for a long-sought after reparatory justice to end the continued abuses against Black and brown communities. -
Press ReleaseOct 2024
National Security
+2 Issues
ACLU Warns that Biden-Harris Administration Rules on AI in National Security Lack Key ProtectionsACLU Warns that Biden-Harris Administration Rules on AI in National Security Lack Key Protections
WASHINGTON — The Biden-Harris administration today released its National Security Memorandum on Artificial Intelligence (AI), establishing guidelines for how the U.S. government uses AI in national security programs, such as counterterrorism, intelligence, homeland security, and defense. The use of AI to automate and expand national security activities poses some of the greatest dangers to people’s lives and civil liberties. Agencies are increasingly exploring the use of AI in decisions about who to surveil, who to stop and search at the airport, who to add to government watchlists, and even who is a military target. While the government’s policy includes some important steps forward — such as requiring national security agencies to better track and assess their AI systems for risks and prohibiting a subset of dangerous AI uses — it falls far short in other critical areas, leaving glaring gaps with respect to independent oversight, transparency, notice, and redress. The policy imposes few substantive safeguards on a wide range of AI-driven activities, by and large allowing agencies to decide for themselves how to mitigate the risks posed by national security systems that have immense consequences for people’s lives and rights. As we have repeatedly seen before, this is a recipe for dangerous technologies to proliferate in secret. “Despite acknowledging the considerable risks of AI, this policy does not go nearly far enough to protect us from dangerous and unaccountable AI systems. National security agencies must not be left to police themselves as they increasingly subject people in the United States to powerful new technologies,” said Patrick Toomey, deputy director of ACLU’s National Security Project. “If developing national security AI systems is an urgent priority for the country, then adopting critical rights and privacy safeguards is just as urgent. Without transparency, independent oversight, and built-in mechanisms for individuals to obtain accountability when AI systems err or fail, the policy’s safeguards are inadequate and place our civil rights and civil liberties at risk.” For years, the American Civil Liberties Union has been urging far stronger safeguards and transparency about the AI tools that national security agencies are deploying, the rules constraining their use, and the dangers these systems pose to fairness, privacy, and due process. -
Press ReleaseOct 2024
Racial Justice
ACLU Comment on the Department of Labor’s AI Guidelines for Employers and VendorsACLU Comment on the Department of Labor’s AI Guidelines for Employers and Vendors
WASHINGTON — Yesterday, the U.S. Department of Labor (DOL) released a roadmap for artificial intelligence (AI) best practices, designed to ensure that emerging technologies such as AI enhance job quality, benefit workers, and comply with existing employment laws when they are used in the workplace. The best practices, pursuant to President Biden’s executive order on the development and use of AI, include recommendations for AI system developers and employers that prioritize workers’ experiences and empowerment throughout the entire AI lifecycle – from design to use and oversight. These practices also call on employers and developers to create standards and processes to identify and mitigate risks from AI systems, such as threats to health and safety, civil rights, privacy, fair labor rights, and labor organizing prior to a developer marketing them or an employer deploying them, and recommend turning to different systems when sufficient mitigation is not possible. “We applaud DOL for issuing best practices for use of AI that center workers’ empowerment, civil rights, privacy, and safety protections and call on developers and employers to adopt critical guardrails in developing, procuring and using AI systems. Employers and developers should take note, as many have been burying their heads in the sand on their risk of legal liability with respect to AI tools,” said Olga Akselrod, senior staff attorney of the ACLU Racial Justice Program. “Following these best practices for AI can help employers and developers ensure that they do not violate existing civil rights and other employment laws that protect workers.” The best practices also recommend transparency measures through conducting and publishing impact assessments, notice and recourse for impacted workers, and measures to minimize worker displacement. The DOL also stated that employers should minimize electronic monitoring and avoid unnecessary collection or retention of worker data.