The financial crisis has left thousands of homes vacant in the US city of Milwaukee. Residents there are placing part of the blame for the mess at Deutsche Bank's door.
Homes values in the Sherman Park area of Milwaukee has fallen substantially
The people of Milwaukee are proud of their city. They enjoy its proximity to Lake Michigan, an abundance of parks and high-class restaurants. But the financial crisis has hit the Wisconsin city hard. Thousands of houses have been foreclosed, their owners evicted because they could no longer repay their loans.
For the people in the Sherman Park neighborhood, the crisis is a nightmare that's turned the area around their homes into a wasteland. A shop named "Milk and Honey" is located on 51st Street, but the fact is there hasn't been anything sweet or creamy about this part of the city since the beginning of the financial crisis.
"I feel like I need to leave," said Dolly Turnbull, who has lived in Sherman Park for 31 years. "But I can't because that's exactly what's going to make it fall apart."
Giaimo said Deutsche Bank is partly responsible for the state of homes in Sherman Park
Drug dealers have moved into some of the rundown properties. Many streets have fallen into disrepair, and half the homes are empty. One of the houses covered in graffiti. "Get money," it says on the wall. The paper boy still delivers free newspapers to the house, but with no one there to collect them they pile up on the porch. This property was once worth $100,000 (76,550 euros). With almost the whole street in bad shape, the price is down to $10,000.
Until three months ago, it didn't look as if anything were about to change. But that's when the people of Milwaukee shifted their gaze from their own streets to far-way Germany. They accused Germany's biggest bank, Deutsche Bank, of being responsible for a large part of the mess. It's ironic, they said, given that it was mostly German immigrants who settled in Milwaukee back in the 1840s.
Susan Giaimo, a Milwaukee professor in political science, travelled to Frankfurt in May. She wanted to stir things up on Deutsche Bank's home turf.
"Deutsche Bank is destroying Milwaukee homes," she said. "Germany built Milwaukee and now a German bank is destroying Milwaukee homes."
Deutsche Bank's role in housing crisis
Thousands of homes have been foreclosed on
Giaimo works with the community organization named Common Ground of Wisconsin. Deutsche Bank is much more involved in the housing crisis than it likes to admit, according to the group. The company bought up large packages of mortgages and resold them for a profit, and it serves as trustee for thousands of Milwaukee homes - many of which have been foreclosed on or are considered at-risk.
According to Deutsche Bank, the company is trustee of 1 million houses across the United States. That makes Deutsche Bank accountable for what is happening with the houses, according to Common Ground.
"The banks made money on these subprime mortgages and we want them to take responsibility," Giaimo said.
But Deutsche Bank said there is not much it can do to improve the situation in the perplexing US mortgage market. The market is made up investors that buy large packages of mortgages. Then there are trustees that administer these packages. And there are servicers that collect the payments from the house owners and have to take care of foreclosed homes.
As trustee, Deutsche Bank has said it is not directly involved in what happens to the properties. A spokesperson told Deutsche Welle it would be illegal for the bank to interfere too much with the operations of other companies involved in the properties' management. Deutsche Bank's role is, therefore, an administrative one, the spokesman added.
But that's difficult to explain to people receiving foreclosure orders bearing the Deutsche Bank logo. It's the German company that legally owns the loans.
Trash, grass and broken windows
Deutsche Bank said it would talk to mortgage services about the problem in Wisconsin
At a meeting in July, the city of Milwaukee tried to sort things out. All major banks came to the city hall - including Deutsche Bank.
Listing thousands of violations, city officials said the servicers are doing a lousy job maintaining the properties they are meant to be taking care of. Trash is littered through the high grass and broken windows abound. The properties with the highest number of violations were managed in Deutsche Bank trusts.
"We're not asking too much of the financial institutions," Alderman Michael Murphy said. "The United States government helped bailout banks and now local government is bailing them out in maintaining their properties. This is not acceptable."
Deutsche Bank has promised to talk to the servicers and ask them to improve the job they are doing. The bank also agreed to discuss plans to invest in Milwaukee.
The city has given Deutsche Bank and its competitors six weeks to lift its game. Otherwise it will consider legal action.
Author: Benjamin Hammer
Editor: Sean Sinico