NEW YORK (Reuters) - The American Civil Liberties Union sued Morgan Stanley on Monday, alleging racial discrimination over packaging subprime mortgage loans into securities. The suit is the first to directly accuse an investment bank, rather than a lender, over loans that violate federal civil rights laws, the group said at a press conference. Morgan Stanley encouraged a unit of now-bankrupt New Century Financial Corp to target black borrowers disproportionately with loans that had a strong possibility of foreclosure and unjustifiably high costs, the suit alleges. .

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