Non-profit group Better Markets sues DOJ over JPMorgan settlement
Non-profit group Better Markets sues DOJ over JPMorgan settlement
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[JURIST] The non-profit financial reform advocacy group Better Markets [advocacy website] filed a lawsuit [complaint] on Monday against the US Department of Justice (DOJ) [official website] to block JPMorgan Chase & Co.’s (JPM) $13 billion settlement that resolved federal and state claims [JURIST report] arising from the bank’s risky mortgage practices which helped lead to the 2008 financial crisis. Better Markets stated of the settlement:

[T]hat agreement was a mere contract and was not reviewed or approved by any court. And, it gave JP Morgan Chase complete civil immunity for years of alleged pervasive, egregious and knowing fraudulent and illegal conduct, which contributed to the worst financial crash since 1929 and the worst economy since the 1930’s. Adding insult to injury, this deal was cut in secret by the DOJ and JP Morgan Chase with the DOJ acting as investigator, prosecutor, judge, jury, sentence and collector without any independent review by a judge. This violates the constitutional separation of powers because there are no checks and balances on the back room deals that DOJ cuts with Wall Street.

The settlement does not release JPM from any potential criminal liability over the bad mortgages. Better Markets claimed JPM’s settlement lacked critical facts to justify the DOJ’s deal, such as names of individuals responsible for the wrongdoing, the amount of damage investors suffered or specific laws violated.

JPMorgan has been under intense scrutiny by US government agencies in the aftermath of the sub-prime mortgage crisis. A JPM settlement finalized last week agreed to pay the US government $614 million and improve company mortgage lending practices for claims it approved thousands of unqualified home mortgage loans for government insurance since 2002 and cost the government millions of dollars when the loans defaulted. In November, the DOJ finalized [JURIST report] a $13 billion civil settlement with JPMorgan that resolved federal and state claims arising from the bank’s risky mortgage practices that helped lead to the 2008 financial crisis. In August the company disclosed [JURIST report] in its quarterly filing with the Securities and Exchange Commission (SEC) [official website] that it is being investigated by both the civil and criminal divisions of the US Attorney’s Office for the Eastern District of California (EDC) [official website] over sales of mortgage-backed securities to investors leading up to the sub-prime mortgage crisis. JPMorgan’s disclosures came one day after the DOJ filed suit [JURIST report] against Bank of America (BOA) [corporate website], claiming the corporation misled investors about securitized loans worth more than $850 million. In an announcement earlier that week, Attorney General Eric Holder remarked [press release] that the suit against BOA prove that the Financial Fraud Enforcement Task Force [official website] is taking an aggressive approach to uncovering abuses in the residential mortgage-backed securities market.