A.C.L.U. to Sue Morgan Stanley Over Mortgage Loans

A.C.L.U. to Sue Morgan Stanley Over Mortgage Loans

The American Civil Liberties Union is accusing Morgan Stanley of fueling the production of risky, expensive loans that targeted African-American borrowers.

In the lawsuit, expected to be filed on Monday, the A.C.L.U. claims that Morgan Stanley is culpable for predatory loans made through the New Century Financial Corporation because the investment bank lent billions of dollars to New Century, a now-defunct subprime lender, and pressured it to make troublesome loans to African-American borrowers who could not afford them.

Morgan Stanley packaged the loans made by New Century and sold them to pension funds and other large investors. But, the lawsuit claims, the bank went beyond the traditional role of an investment bank by requiring that the mortgage company churn out the wildly profitable loans that came with “dangerous” characteristics.

For example, the lawsuit says, many of the loans ultimately sold to investors were “stated income” loans, in which borrowers could estimate their incomes without having to provide supporting documentation.

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One Response to “A.C.L.U. to Sue Morgan Stanley Over Mortgage Loans”
  1. Sarah says:

    The ACLU stands to gain credibility if they put everything they have into this effort. Sue all of them. It is important to understand banksters preyed on all groups, but particularly on poorer minorities. The only question is why has it taken years for the ACLU to do anything when this stuff was well known for many years.

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