Politico pointed today to an Aug. 11 Reuters story that says Deutsche Bank will funnel the $6 billion to $7 billion in investment money it puts aside for climate change not to the United States, but to Western Europe and, wait for it, China.

According to Reuters:

Amid so much political uncertainty in the United States, Parker said Deutsche Bank will focus its “green” investment dollars more and more on opportunities in China and Western Europe, where it sees governments providing a more positive environment.

“They’re asleep at the wheel on climate change, asleep at the wheel on job growth, asleep at the wheel on this industrial revolution taking place in the energy industry,” [Deutsche Bank's Kevin] Parker said of Washington’s inability to seal a climate-change program and other alternative energy incentives into place.

It’s the nightmare scenario for the renewable energy industry, which has been howling in recent months over a lack of investment in renewable energy technology. And it appears to play right into Democrats’ talking points. A failure to act on climate change legislation is in fact driving investment to other countries, including China, which announced last month that it would begin capping its greenhouse gas emissions.

However, for what one assumes are less than coincidental reasons, several banks who also received publicly disclosed TARP funds joined the Fed in its quixotic quest to keep quiet about who took the Fed’s money too. That group includes ABN Amro Bank, Bank of America Corp., The Bank of New York Mellon Corp., Citigroup Inc., Deutsche Bank, HSBC, JPMorgan Chase, US Bancorp and Wells Fargo. If it seems to the average layperson that these banks have already basically disclosed that they are among the beneficiaries of the Fed’s largess and haven’t suffered any ill effect, that might underscore Bloomberg’s reasoning that the Fed simply doesn’t want to be subject to any oversight rather than that there are major business concerns with the disclosure.

In particular, the appeals court ruled today that the Fed and the banks who mysteriously don’t want the Fed to disclose the banks that accepted their loans during the financial crisis failed to meet the standard set forth by the FOIA for keeping such information secret.

In its opinion today, the appeals court said that the exception applies only if the agency can satisfy a three-part test. The information must be a trade secret or commercial or financial in character; must be obtained from a person; and must be privileged or confidential, according to the opinion.The court said that the information sought by Bloomberg was not “obtained from” the borrowing banks. It rejected an alternative argument the individual Federal Reserve Banks are “persons,” for purposes of the law because they would not suffer the kind of harm required under the “privileged and confidential” requirement of the exemption.

In other words, the Fed argued that the individual Federal Reserve Banks which comprise the Fed are people, not banks, and thus covered by the law. Unlike the Supreme Court in Citizens United v. FEC, the appeals court rejected the idea that the banks are people or that they would be harmed by disclosing to whom they lent money.

In the preliminary injunction he issued Thursday, Judge Raymond Pianka also required Wells Fargo to prove its foreclosed properties are up to city building and housing codes before the bank can sell any of them for less than $40,000, Cleveland.com reports. Pianka will decide at some point whether to make the injunction permanent. But housing advocates  still consider his initial decision a huge step forward, because it gives a local community – for the first time ever – some legal clout in battling huge global banks that own vacant or dilapidated foreclosed properties in their neighborhoods.

As TWI has reported, a local housing group in Cleveland filed a novel lawsuit last year against Wells Fargo and Deutsche Bank, trying to halt the “death spiral” of falling property values in neighborhoods overwhelmed by foreclosures. The suit asked  housing court to declare blighted and foreclosed properties owned by both banks in Cleveland in violation of public nuisance laws – -and to require the banks to fix them up or tear them down.

In cities such as Cleveland, where home values never appreciated much during the housing boom, banks have little interest in holding on to an increasingly bloated inventory of foreclosed houses. After taking the properties back at sheriff’s sales, lenders unload the houses at fire sale prices, often to speculators and flippers. The public has an interest in stopping the practice because cities are losing huge amounts of revenue as property values fall and neighborhoods are devastated, the neighborhood group and its attorneys argued. And banks, for the most part, have not been held accountable for the damage they’ve left behind.

The Cleveland lawsuit is especially significant because using local nuisance laws to stop foreclosure sales is a new technique — and it could also be tried by other cities frustrated by foreclosures and falling property values.

From Cleveland.com:

“I don’t believe a court anywhere in the country has issued an order that’s this comprehensive against a major financial institution,” said Frank Ford, executive director of the nonprofit housing advocacy group that had sued Wells Fargo over its property conditions.

“The ruling is specific to Wells Fargo, but it sets a precedent that says banks that have foreclosed on property, allow it to go vacant, and don’t maintain it are going to be held to the same standards as any property owner in Cleveland,” he said.

Cleveland housing attorney Kermit Lind told TWI in an email that the court’s decision makes it clear local governments have the right to challenge the business practices of global banks that made subprime loans in cities and left foreclosed properties behind.

“The court is saying that banks are not too big to comply with local laws and they are not protected by preemption from being required to do so. Local governments are not prevented from protecting the public health, safety and welfare from the unlawful business practices of those who deal in housing for commercial gain.”

Thursday’s decision applies only to Wells Fargo’s properties in Cleveland, which numbered about 180 as of April. Both Wells Fargo and Deutsche Bank previously had tried to get the suit reassigned to a federal court. Wells Fargo is trying to get Pianka removed from the case and is challenging the ruling, according to Cleveland.com.

In a written statement issued late Thursday, Wells Fargo spokesman Kevin Waetke said the company believed there was no legal basis for the decision and will consider appealing.

“Wells Fargo has a long history of responsible lending and servicing in our communities,” he said. “We stand by our lending record and practices as we feel it is always in the best interests of the community to have the home reoccupied in order to preserve the neighborhood.”

Wells Fargo separately requested Thursday that Pianka remove himself from the case and suggested that his attendance at a recent conference on vacant properties, the primary issue in the case, created an appearance of bias. Pianka declined to recuse himself.

The suit initially was filed in December. Last month, Pianka issued a temporary restraining order preventing Wells Fargo from selling any foreclosed properties it owns in Cleveland before fixing them up. That order expired Thursday.

As far as Deutsche Bank goes, its part of suit is in the federal court of appeals and scheduled to be briefed over the summer.

The preliminary injunction for Wells Fargo is probably going to be appealed to the state court of appeals in Cuyahoga County. According to Lind, Pianka’s injunction stays in effect until the case is decided finally. That could be months, he said.

In the meantime, other towns struggling with vacancies and foreclosures will no doubt be following this case very closely.

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The neighborhood group is still trying to get the case back in housing court, but it’s a difficult battle. Let’s see: A neighborhood nonprofit up against the financial resources of two global banks. Whose pockets do you think are deeper?

It’s no surprise those banks wanted the case moved to federal court. It will be much more costly for the neighborhood group to argue its case there. Housing court judges, on the hand, can and do handle these cases quickly and efficiently. They bring the hammer down on banks that leave foreclosed properties behind in cities for the taxpayer to clean up. They often don’t buy the argument that servicers are responsible for the upkeep of the properties.

I remember talking early last year with Cleveland Housing Court Judge Raymond Pianka, who has drawn national attention for holding banks responsible for dumping foreclosed properties. Pianka lives in a Cleveland neighborhood, he told me. There are foreclosed houses on his street. This crisis is part of his everyday life.

The move to federal court is more than just an arcane legal development. The neighborhood group wants the case heard in housing court because it validates what has become increasingly clear in the foreclosure crisis: Banks are property owners, with all the responsibilities that come with it. As they foreclose on houses and their inventories of bank-owned properties swell, banks try to dodge this reality by blaming servicers and paying lawyers to get them out of housing court. The same thing happened in Cincinnati recently, where the local legal aid agency filed suit in housing court, but the case was moved to a federal court instead.

Maybe this tactic will work for a while, but eventually, I think banks are going to have to be held accountable for what they’ve done. Entire swaths of neighborhoods in once-great cities are in ruins – that’s not an exaggeration – as banks fail to secure, maintain or demolish foreclosed properties. Neighbors who pay their mortgages feel the pain as their property values plummet. City coffers and services take a hit. It will take decades to recover from this.

And yet, the banks walk away. The bank argument continues to be that It’s someone else’s responsibility. But banks aren’t just lenders anymore – like it or not, they are property managers. If they didn’t want to be in that position, they shouldn’t have sold high-rate mortgages that they knew people couldn’t pay. So as property managers, they have the same obligation any other landlord would, and they should be subject to housing code violations, just like any other landlord would. It’s too bad policymakers who put together the bailout didn’t put some conditions on it to require banks to do their part.

Instead, they got a free ride. And homeowners in neighborhoods all around the country are paying for it.