While most of the sneering generated by Ohio municipalities who blame mortgage lenders and securitiziers for the pitiful state of their fiscal and physical condition has been directed against Cleveland, we should not forget another veritable Eden-on-Earth, Cincinnati, the city where one of the hardest playing, hardest headed, and most ethically challenged baseball players of all time, Pete Rose, spent the lion's share of his career. Gamblin' Pedro never would have whined like the leaders of this fair city have, suing lenders right and left in a desperate bid to overtake Cleveland in "the-fact-we-suck-is-not-our-fault" sweepstakes.
Proving that when you're actually solvent you get to hire lawyers who not only have a sense of ingenuity, but a sense of irony, as well, one of the sued banks went on the offensive and sued the city. According to a recent article in The Cincinnati Enquirer, the worm turned and bit the City square on the tukus.
The city of Cincinnati violated the civil rights of a West Virginia bank holding company by holding it responsible for apartment buildings it foreclosed on, the bank claimed in a lawsuit Monday.
Wesbanco Bank Inc. alleged in Hamilton County Common Pleas Court that the city and two of its building inspectors engaged in a pattern of malicious prosecution against the bank.
The lawsuit invokes a section of federal law - popularly known as the Ku Klux Klan Act - most often used today in cases involving police brutality, false arrest or other police misconduct. It claims building inspectors Albert Taylor and Edward Cunningham violated the bank's constitutional rights by attempting to force it to clean up a North Fairmount apartment building the bank says it doesn't own.
The City filed criminal charges against the bank even though the bank didn't accept title to the property. The borrower tried to skate liability for the condition of the property by unilaterally recording deeds to the bank without the bank's prior knowledge and walking away. If I were running the bank, once I found out about the deeds, I would have quitclaimed the derelict rat-traps to the mayor and demanded that he be given the death penalty.
As it was, the bank claimed (quite correctly) that it couldn't be forced to accept title to collateral, was not the owner, and didn't need to show up in court to face criminal charges. A judge tossed out the criminal charges. The city is now asking the Ohio Supreme Court to rule that cities can press criminal charges against banks arising out of the condition of real property even if the bank doesn't own the property, apparently under some legal theory concocted during an all-nighter spent consuming mushroom caps and licking toads.
The ultimate disconnect between fantasy and reality, however, appears to reside in the mind of the city's lawyer.
Cincinnati Solicitor John P. Curp said Monday that he's met with executives from several major banks in an effort to work out solutions to the foreclosure crisis, but Wesbanco doesn't want to come to the table. Filing criminal actions was a "last resort," he said.
"I'm disappointed that they've chosen to escalate this with a new lawsuit," he said. "We have a lot of current issues in front of us, and I think everyone's energies would be better served by them cleaning up the parcels they currently own."
Well, I'm sure the bank was also disappointed when questionable criminal charges were brought against it and it had to shell out cash to hire legal gunslingers to ride into town and make you cry like a little girl, John. That's what happens when you try to bully people from West Virginia. They breed tough hombres there who are incapable of knuckling under to effete Buckeyes who falsely brand them criminals. Moreover, you weren't demanding that the bank clean up property it owns. You filed criminal charges against it to clean up property that it didn't own.
A source close to the litigation, who requested anonymity, filled me in on several facts not mentioned in the article (not that the local press might be anti-bank, mind you). First, the city had previously dismissed two other criminal actions when the bank threatened the same type of lawsuit. Those other properties involved the same borrower using the same tactic of unilaterally deeding real estate to the bank. The city handled the dismissals quietly because they were strong-arming other lenders with the same bully-boy tactics and didn't want to jeopardize the opportunity to extort money from shake down reach settlements with the other lenders, who might not have had as much testosterone flowing through their corporate veins as Wesbanco Bank. I'm not certain, but agreeing to pay money to the city under such a bogus threat smacks of a bank with much less than the right stuff, a bank based in a more gentile clime, say San Francisco, or France, perhaps.
Also not discussed in the story is that the bank shot back at the city not with a single bullet (the Section 1983 claim), but with double-O buckshot: additional claims of malicious prosecution and that the city was attempting to improperly regulate the business of lending (similar to the claim that smacked down Cleveland). Furthermore, although the article states that the bank's counsel was not authorized to comment, it failed to use any portion of a press release issued by the bank, which stated the bank's official position quite clearly. Far from an "objective analysis", eh?
Don't expect the city to win in court. It's reasoning defies logic. On the other hand, the spin is all cynical pols care about, especially when the press fails or refuses to understand and/or report the issues thoroughly. It's merely a matter of shining bright objects in the eyes of the voters and hoping they'll continue to be distracted from the real causes of the deterioration of their cities.
As we and others have said, this pattern of dysfunctional behavior by local politicians is likely to continue, no matter how pathetic the prospects might be for ultimately prevailing in court.