Friday, January 11, 2008
Cleveland sues 21 banks over subprime mess - Cleveland Metro News – The Latest Breaking News, Photos and Stories from The Plain Dealer
Cleveland Mayor Frank Jackson took aim at Wall Street on Thursday with a lawsuit against 21 major investment banks that he said have enabled the subprime lending and foreclosure crisis here.
The one-of-a-kind suit, filed in Cuyahoga County Common Pleas Court, accuses venerable institutions such as Deutsche Bank, Goldman Sachs, Merrill Lynch and Wells Fargo of creating a public nuisance.
Jackson contends the companies irresponsibly bought and sold high-interest home loans. The result: widespread defaults that depleted the city's tax base and left entire neighborhoods in ruins.
City officials hope 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," Jackson said in an interview with Plain Dealer reporters and editors. "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."
One could say government, including city government, is a "form of organized crime that happens to be legal in many respects."
Of course they should go after mortgage brokers, but..they're largely gone, and Willie Sutton and all that. (H/T Calculated Risk)
Just goes to show you how the TH blog stays current with my current interests. I was coming to work this morning listening to NPR Morning Edition and boiling. (I would link, but it is not up yet so I’m linking to the CNN Story)
Ok, let me see if I get this right. As a bank, if I offer as low as .5 percent fewer loans to minorities, I’ll get sued. And now Wells Fargo is getting sued since they are offering *more* loans to minorities. (Oh, those evil bankers)
Since there will be a difference between the number of applicants vs the number of approved loans, it is be currently possible for a bank to be sued from both ends, much like the man who was sued by his lover for child support and his wife for divorce due to sterility, and lost both cases.
So where is the incentive for banks to loan *any* money?