The city of Cleveland, an epicenter of the U.S.’s home foreclosure crisis, has sued 21 banks, claiming subprime mortgage lending in inner-city neighborhoods has created a public nuisance that hurt property values and city tax collections.
The one-of-a-kind suit, filed in Cuyahoga County, Ohio Common Pleas Court, accuses venerable institutions such as Deutsche Bank (DB), Goldman Sachs (GS), Merrill Lynch (MER) and Wells Fargo (WFC) of creating a public nuisance. The lawsuit seeks to recover hundreds of millions of dollars in damages, including lost taxes from devalued property and money spent demolishing and boarding up thousands of abandoned houses.
"To me, this is no different than organized crime or drugs," Mayor Frank Jackson told The Plain Dealer. He arranged a news conference Friday to detail the city’s legal strategy.
"It has the same effect as drug activity in neighborhoods. It’s a form of organized crime that happens to be legal in many respects," Jackson said.
Nothing like a little hyperbole from a politician getting on the bandwagon against lenders! The Wall Street Journal Legal Blog weighs in here.