By Chris Isidore @CNNMoney
NEW YORK (CNNMoney) – The American Civil Liberties Union sued Morgan Stanley on Monday, charging the Wall Street firm discriminated against African-American homeowners and violated federal civil rights laws by providing funding for risky mortgages.
The suit, filed in U.S. District Court in New York, is the first that connects racial discrimination to the process of bundling subprime loans into mortgage-backed bonds that were then sold to institutional investors and pension funds. The lawsuit was filed behalf of five Detroit residents, and asks the court to certify the case as a class action. It argues as many as 6,000 black homeowners in the Detroit area may have suffered similar discrimination.