October 23, 2007 (LPAC)--"The crash in the Chicago area market for new homes has claimed its biggest casualty," the Chicago Sun Times reported, as Neumann Homes filed for bankruptcy today. The company blamed its predicament on a more than 50% drop in annual sales of new homes in the Chicago and Denver markets, and its 2005 decision to invest in the Detroit market. That latter move cost it more than $60 million. Neumann laid off most of its 2,100 employees in the Chicago area a week ago. By size, Neumann was the 35th largest homebuilder in the U.S. The Chicago Tribune quoted CEO Kenneth P. Neumann, who said the "significant downturn in the Detroit, Chicago and Denver housing markets resulted in this situation.... Even after the significant help we have received from our lenders this year, the company can no longer weather this storm."

Meanwhile, the impact of the housing crisis, adding to falling revenues, has put the Chicago City Council into heated debate over Mayor Richard Daley's proposed $5.9 billion budget for 2008, which includes $293 million in added taxes. His most controversial proposal is a $108 million property tax hike. "The property tax increase is going over like a lead balloon in the City Council," said Ald. Michael Zalewski (23rd), SouthwestNews reported.

But hiking taxes or bringing in casinos only makes the disease worse. Chicago had a 45% increase in the number of foreclosure filings this year over last.

On Oct. 5, a resolution was filed in the Illinois legislature (H.R. 0761) calling for emergency Federal action along the lines of Lyndon LaRouche's Homeowners and Bank Protection Act. The best medicine the Chicago City Council could provide is a resolution endorsing this resolution.