ACLU vs. Morgan Stanley

Blog Category: Race & Economics in the Media

Written by: *Megan A. Hunsicker

On October 15, 2012, the American Civil Liberties Union (“ACLU”) filed a lawsuit against Morgan Stanley for violating the Fair Housing Act, particularly for discriminating on the basis of race in the secondary mortgage market, which is where high-risk loans are bundled and marketed to investors.

Specifically, the ACLU alleged Morgan Stanley sought high-risk loans disproportionally concentrated in non-white neighborhoods—“Subprime loans were five times more likely to be found in African American neighborhoods than in white neighborhoods”—with the expectation that those loans would default.

That practice directly conflicts with the provisions in the Amendments to Title VIII of the Civil Rights Act, which state that, “‘pooling or packaging loans’ on the basis of race is a violation of Title VIII.”  While the government has attempted to litigate the harms of the subprime crisis under fraud principles, this lawsuit is the first major lawsuit to advance claims under the Civil Rights Act.

If the lawsuit is successful, the implications will be profound and staggering, considering the damages suffered from predatory lending practices, which triggered the foreclosure crisis, and the importance of framing the issue and damages as a civil rights violations.


*Meghan A. Hunsicker is the Internal Managing Editor on the Widener Journal of Law, Economics and Race. To learn more about Meghan A. Hunsicker, click here to view her page: Meghan A. Hunsicker
John A. Powell, Civil Rights Today: The Landmark Case of Adkins et. al. v. Morgan Stanley, EQUAL JUSTICE SOCIETY (October 17, 2012),

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