In July, we noted that while other broken Eastern cities that tried to blame their economic decline on the nefarious mortgage lending practices of banks with deep pockets were being handed their heads by judges who followed both the law's letter and its intent (as opposed to using a lawsuit as an excuse to make economic and social policy), the City of Baltimore was "hanging in there," albeit by the skin of its teeth. An interested reader sent word recently that that skin appears to be sloughing off.
Baltimore sued Wells Fargo, alleging that its "racially discriminatory mortgage lending practices" had led to "a wave of foreclosures" that had devastated the city and cost it "millions of dollars." While one federal district court judge denied Wells Fargo's motion to dismiss the city's complaint, we observed that "[s]urviving a motion to dismiss is a long way from proving your claims at trial by a preponderance of the evidence." Last week, another federal judge now hearing the case raised serious doubts about whether the case would even make it to trial.
A federal judge raised doubts Monday about the city's ability to prove huge financial losses from houses left vacant by Wells Fargo foreclosures, the latest development in a landmark civil suit alleging a pattern of racially based, discriminatory lending by the mortgage broker.
U.S. District Judge J. Frederick Motz said he might pare the case, if not outright dismiss it.
"Should we go down that road? ... It's going to cost a lot of people a lot of money, including the taxpayers," said Motz, who took over the case in August after the previous judge discovered a conflict of interest.
Imagine that: someone actually considering that political theater that hasn't a snowball's chance in Baghdad of producing any financial reward for the plaintiff city is costing a bundle for the city's taxpayers whose anger it seeks to stoke. Judge Motz observed that it's extremely difficult to prove that the practices of Wells Fargo, even if the allegations of the city in this respect are true, directly caused the tens of millions of dollars in economic consequences that are claimed by the city. If you can't prove causation, you don't have a case.
There are as many as 30,000 vacant properties throughout Baltimore, and Motz suggested that trying to gauge the citywide consequences of one vacant property on a street that has nine more is futile.
"Why have the expense? I can tell you now it's silly," said Motz, who also acknowledged that the "deterioration of the inner city" is "shocking" and "disturbing."
That deterioration is as disturbing in Baltimore as it is in Cleveland and Birmingham, two other cities that filed similar lawsuits and had them dismissed by the courts. You can see the attraction of these lawsuits for political "leaders." If they can blame bad old banks for all their woes, they don't have to face up to the real causes.
Since 1970, according to the Census, Baltimore lost more than 84 percent of its manufacturing jobs. It now ranks as the nation's 15th poorest major city, with a poverty rate that has remained steady at 20 percent, in one of the wealthiest states.
The devastated neighborhoods of Baltimore's inner city were a long time in the making. To have prevented them would have taken foresight, imagination, and political courage. To renew them now will likely take a transcendent power. It's extremely doubtful that that any useful solutions will be forthcoming from a political class that wants to pick the pockets of banks like Wells Fargo that, though hardly standing as paragons of virtue, aren't the root cause of what ails Baltimore and cities like it. These lawsuits are just a very expensive diversion. The only "winners" are the trial lawyers.
