SAN FRANCISCO (CN) — The city of Oakland cannot sue Wells Fargo for allegedly racist lending practices that it says triggered widespread foreclosures and lost property tax revenue, an en banc Ninth Circuit panel ruled Tuesday.
Reversing a prior Ninth Circuit opinion, an 11-judge en banc panel found the link between the bank’s lending practices and Oakland’s lost tax income was too remote. Because other factors could have contributed to foreclosures and lower property values, the panel concluded the city's Fair Housing Act lawsuit must be dismissed.
“The reason for default could be attributable to many independent factors, such as job loss, a medical hardship, a death in the family, a divorce, a fire or other catastrophe, Covid-19, broader economic trends, or any number of other unpredictable causes not present when the loan was made,” U.S. Circuit Judge M. Margaret McKeown, a Bill Clinton appointee, wrote for the 11-judge panel in a 25-page opinion.
Oakland sued Wells Fargo in 2015, claiming the bank steered minority homebuyers into predatory loans that caused hundreds of foreclosures and as much as $50 billion in reduced property values.
In August 2020, a three-judge Ninth Circuit panel advanced the lawsuit, finding the city’s proposed statistical analysis “precisely calculates the loss in property values in Oakland’s minority neighborhoods that is attributable to foreclosures caused by Wells Fargo’s predatory loans, which in turn can be used to calculate the city’s corresponding loss in property-tax revenues.”





