First Baltimore, Now Cleveland: Banks Facing More Subprime Lawsuits

With thousands of its homes abandoned and public works projects permanently postponed for lack of revenue, Cleveland is filing suit against 21 of the nation's largest banks for their role in the subprime mortgage fiasco.

2 minute read

January 15, 2008, 11:00 AM PST

By Michael Dudley


"Cleveland is suing 21 of the nation's largest banks and financial institutions, accusing them of knowingly plunging the city into a financial crisis by flooding the local housing market with subprime mortgage loans to people who could never repay.

The city is seeking "at least" hundreds of millions of dollars in damages, Cleveland's law director, Robert J. Triozzi, said Friday. The list of defendants includes some of the most prominent firms on Wall Street, like Citigroup, Bank of America, Wells Fargo, Merrill Lynch and Countrywide Financial.

Mayor Frank G. Jackson said in an interview on Friday that the companies would be "held accountable for what they've done...We're going after them to get the resources we need to rebuild our city," Mr. Jackson said.

The financial crisis has hit Cleveland especially hard, with more than 7,000 foreclosures in each of the last two years, Mr. Jackson said. Entire city blocks have been abandoned. The city's budget has been strained by the effort to maintain thousands of boarded-up homes, and by the cost of responding to a rise in violent crime and arson.

The drop in homeownership, and a steep decline in population - to 444,000 residents in 2007 from almost a million in 1950, according to census figures - has drained Cleveland's budget. In December, Mr. Jackson announced that the city was unable to borrow money and would be forced to postpone or permanently shelve millions of dollars in public works projects.

Instead of aiming at the banks that originally made subprime mortgage loans in the city, the lawsuit is against those firms that bundled the loans into securities to be divided into shares and sold on the stock exchange. This process, and the large fees the firms generated from the work, Mr. Triozzi said, drove their effort to make as many loans as possible during an era of low interest rates and a prolonged housing boom."

Saturday, January 12, 2008 in The New York Times

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Get top-rated, practical training

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

April 30, 2025 - Diana Ionescu

Close-up on Canadian flag with Canada Parliament building blurred in background.

Canada vs. Kamala: Whose Liberal Housing Platform Comes Out on Top?

As Canada votes for a new Prime Minister, what can America learn from the leading liberal candidate of its neighbor to the north?

April 28, 2025 - Benjamin Schneider

Hot air balloons rise over Downtown Boise with the State Capitol building visible amidst the high rises.

The Five Most-Changed American Cities

A ranking of population change, home values, and jobs highlights the nation’s most dynamic and most stagnant regions.

April 23, 2025 - GoodMigrations

People biking along beach path with moored ship in San Diego, California.

San Diego Adopts First Mobility Master Plan

The plan provides a comprehensive framework for making San Diego’s transportation network more multimodal, accessible, and sustainable.

May 2 - SD News

Sleeping in Public

Housing, Supportive Service Providers Brace for Federal Cuts

Organizations that provide housing assistance are tightening their purse strings and making plans for maintaining operations if federal funding dries up.

May 2 - KSL

Conductor walks down platform next to Amtrak train at station in San Jose, California.

Op-Ed: Why an Effective Passenger Rail Network Needs Government Involvement

An outdated rail network that privileges freight won’t be fixed by privatizing Amtrak.

May 2 - Streetsblog USA

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.

Senior Manager Operations, Urban Planning

New York City School Construction Authority

Building Inspector

Village of Glen Ellyn

Manager of Model Development

Central Transportation Planning Staff/Boston Region MPO