A federal judge has granted Bank of America a win in its long-running legal battle with Cook County over the county’s accusations that the big bank's allegedly racially discriminatory lending practices led to problems with foreclosures in Chicago and elsewhere in Illinois' largest county amid the Great Recession.
Cook County sued Bank of America in 2014, along with separate lawsuits against other large lenders. In each case, the county alleged the lenders violated the federal Fair Housing Act by issuing home loans to Black and other racial minority borrowers with rates and terms allegedly more burdensome than loans offered to white borrowers with similar financial history.
Reverse redlining, the county alleged, helped fuel a foreclosure wave by stripping equity from minority borrowers, causing them to default and leaving vacant homes, which further depressed property values and taxes, while increasing county costs for services related to the foreclosures and vacancies.
Kenneth Wexler
| Wexler Wallace
In an opinion issued Feb. 10, U.S. District Judge Elaine Bucklo granted summary judgment in favor of Bank of America. She noted the county survived more than one motion to dismiss, but during the course of proceedings, she eventually limited the county's case, saying the county could only demand reimbursement for “out-of-pocket costs in serving eviction notices, conducting judicial and administrative foreclosure proceedings and registering and inspecting foreclosed properties.”
Bank of America argued the county can’t prove an “equity stripping scheme.” Even if the bank was guilty of the allegations, the judge said there wasn’t enough evidence to lead a jury to conclude the practices led to disproportional foreclosures on minority borrowers, the county didn’t demonstrate losses because it had no proof of increased foreclosure expenses, and a loss theory based on shifting resources “is both legally flawed and factually unsupported."
She further said the county didn’t dispute a lack of affirmative evidence of the integrated scheme it alleges, but rather argued the bank’s argument rests on the absence of a written policy. However, she said the county is obligated “to prove a unified scheme that the record simply does not substantiate.”
Although the county made several allegations about the bank’s lending practices, even if it could persuade a jury the bank were guilty of such conduct, Bucklo said, a jury wouldn’t find a reasonable basis for the conclusion of a scheme targeting minorities. Without a substantial link between the allegations of misconduct and the claimed injuries, summary judgment is appropriate in favor of Bank of America.
Bucklo also said the county lacked either direct or circumstantial evidence for its claims of intentional discrimination. Many allegations, she explained, at best show the bank understood a possibility some practices might negatively impact minorities, but fails to show how the bank set out to be discriminatory.
“Even taken at face value,” Bucklo wrote, the county’s “evidence comes nowhere near establishing that ‘almost all minorities’ were ‘negatively affected’ by the practices the county challenges, while ‘almost no whites’ were negatively affected.”
Bucklo also agreed to exclude all the opinions from one of the county’s witnesses, Gary Lacefield, saying his “methodology has never been used, much less approved, by anyone else in the field of fair lending and is fundamentally incapable of generating statistical data that would assist the jury in deciding whether there exists a ‘robust causal connection’ between defendants’ practices and the race-based disparate impact the County seeks to prove.”
The judge likewise rejected opinions on liability from Charles Cowan, a statistical design and research expert, based on Bank of America’s challenges to his approach. Bucklo said “Cowan’s own analysis illustrates why aggregating loan data in the way that he does yields unreliable results.”
Bank of America also argued Cowan’s testimony wouldn’t help answer the pressing legal question: Not whether disparate outcomes based on race could be shown in data, but whether the bank had a specific policy causing those outcomes. Bucklo said the county could supplement Cowan’s expertise with other information, but it did so only with Lacefield’s testimony and therefore it failed to show the link needed to survive a motion for summary judgment.
Ultimately, Bucklo said, the county simply can’t demonstrate it suffered the losses it claimed.
“The County’s former chief financial officer examined the county’s budget documents and found that these offices’ appropriations and expenditures remained essentially stable from 2004 through 2018 — the period for which the County seeks damages — while residential foreclosures spiked and then declined,” Bucklo wrote. “The county experienced no material increases in its costs as a result of increased foreclosures.”
Cook County has been represented by attorneys Kenneth A. Wexler, of Wexler Boley & Elgersma, of Chicago; James M. Evangelista, David J. Worley, Kristi Stahnke McGregor and Leslie G. Toran, of the firm of Evangelista Worley, of Atlanta; and Sanford P. Dumain, Jennifer S. Czeisler and Roy Shimon, of the firm of Milberg Phillips Grossman, of Garden City, New York.
They were hired by the Cook County State's Attorneys to serve as special assistant state's attorneys in the litigation against Bank of America.
Bank of America has been represented by attorneys Matthew S. Sheldon, Thomas M. Hefferon, Levi Swank, Yvonne Chan, Benjamin R. Cox and Courtney L. Hayden, of Goodwin Procter, of Washington, D.C., and Boston; and attorney Joseph L. Motto, of Winston & Strawn, of Chicago.