CLEVELAND, Ohio, Jan 27, 2008 (AFP) – Hit by America’s mortgage crisis, the midwestern city of Cleveland has launched a legal battle against major Wall Street banks it blames for the devastation of its housing market.
Cleveland Mayor Frank Jackson has accused a group of 21 big banks and financial firms of triggering local housing woes through the marketing of subprime home loans.
The number of housing foreclosures in the city leapt to 70,000 last year from 120 in 2002 amid a national housing slump.
“The subprime market devastated my city. It wound up creating blight and a public nuisance,” the mayor told AFP in an interview.
The use of subprime home loans, granted to Americans with poor credit, ballooned during a years-long housing boom which ran out of steam in 2006. The nation’s housing market has been in decline since that time.
“The consequences of what they were doing didn’t matter. They were living large off our misery. They are the ones that fueled this operation and that put us in this meltdown,” Jackson said of the banks.
A formerly prosperous industrial city situated on the banks of Lake Erie, Cleveland’s population has shrunk in recent decades to some 450,000 inhabitants from a