Los Angeles Sues U.S. Bancorp for Being ‘Slumlord’

by Angela Nazworth | July 18, 2012 11:25 am

Los Angeles Sues U.S. Bancorp for Being ‘Slumlord’

This week has brought both good and bad news to U.S. Bancorp (NYSE:USB[1]). The financial giant reported solid revenue growth[2] Wednesday, but was slapped with a lawsuit earlier in the week.

Los Angeles filed a civil lawsuit against the bank Monday accusing a U.S. Bancorp unit of being a slumlord. The lawsuit alleges that the bank has allowed hundreds of foreclosed homes to become inhabitable, Reuters reports[3]. The city is pursuing a civil fine of $2,500 a day for each violation and expects the amount could add up to well over $100 million.

“This lawsuit is a deterrent,” Los Angeles City Attorney Carmen Trutanich told reporters yesterday.  “It’s a message to other banks; step up and do the right thing.”

This isn’t the first time Trutanich has led a lawsuit against a bank the city refers to as a “slumlord.” In 2011, LA alleged that Germany’s Deutsche Bank (NYSE:DB[4]) allowed some of its Los Angeles properties to deteriorate.

U.S. Bancorp spokesman Thomas Joyce told Reuters that mortgage servicers and not the bank — which actually serves as the trustee of the mortgages — is responsible for the upkeep of foreclosed properties.

Endnotes:
  1. USB: http://studio-5.financialcontent.com/investplace/quote?Symbol=USB
  2. solid revenue growth: http://investorplace.com/2012/07/u-s-bancorp-tops-forecasts/
  3. Reuters reports: http://www.reuters.com/article/2012/07/17/us-usbancorp-losangeles-idUSBRE86G0P620120717?feedType=RSS&feedName=domesticNews
  4. DB: http://studio-5.financialcontent.com/investplace/quote?Symbol=DB

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