Deutsche Bank: The Slumlord of Los Angeles

Ahh - the smell of lawsuits in springtime.  Last week the US government sued Deutsche Bank for massive fraud in its mortgage origination business.  Now the City of Los Angeles is suing the giant German bank for being the city's worst slumlord:

The suit says Deutsche Bank broke a number of public nuisance and other laws.

The bank allowed many homes and buildings to deteriorate into boarded-up, graffiti-scrawled, trash-strewn eyesores that have led to increased crime in neighborhoods and contributed to falling home prices, the city alleged.

The lawsuit also contended that Deutsche Bank acquired hundreds of foreclosed properties with tenants who were forced out through "threats, small cash payments and baseless eviction actions" that violated the city's rent stabilization ordinance and federal laws.

Der Spiegel sent a reporter to interview one of Deutsche Bank's tenants - Nancy Rodriguez in South Los Angeles - who describes the appalling conditions in the apartment where she lives with her baby:

"Bei uns sinkt der Fußboden ein, die Wände bröckeln, und das Holzfundament ist verrottet." Wahrscheinlich sind Wasserrohre undicht, denn "überall haben wir Schimmel". Die eine Nachbarin habe zwei Jahre lang kein heißes Wasser gehabt. "Bei der anderen ist das Dach undicht. Der Regen hat die Decke aufgeweicht, bis sie einbrach."

("The floor is sinking down, the walls are crumbling and the wood foundation is rotting." The pipes are probably leaking since "there's mold everywhere.  One of the neighbors hasn't had any hot water in two years. "The other one's roof is leaking. The rain softened the ceiling until it finally collapsed.")

No doubt Deutsche Bank will settle this lawsuit and pay $$millions in fines. "Peanuts" in the eyes of CEO Josef Ackermann; it will have no affect on his goal of achieving 25% Return on Equity.

Here's a better solution: The CIty of Los Angeles should force Ackermann to leave his villa in Bad Homburg and live in one of his slum apartments for a year.  Maybe he would then rethink Deutsche Bank's policy of "profits - no matter what the cost."

Comments

[Laura Morton]

Who is collecting the rent checks? The person or company that cashes the checks has an obligation to maintain the property. The city has the right to cut the grass and charge for this service. No payment and a lien is put on the property.

[ReifeSandra]

I like the efforts you have put in this, thank you for all the great posts.