“The Justice Department (DOJ) broke the law when it settled mortgage finance market fraud allegations against JP Morgan in a headline-grabbing legal settlement last year, according to a lawsuit filed Monday by the Wall Street reform advocacy group Better Markets.
“By granting the bank immunity from further civil suits, Better Markets President Dennis Kelleher said, the DOJ acted “as prosecutor, jury and judge…to the largest, richest, most politically-connected bank on Wall Street.” Kelleher’s group wants judicial review of the facts underlying the settlement to ensure that JP Morgan pays a penalty that is proportional to the bank’s misdeeds, and says that the DOJ’s failure to seek a judge’s independent approval violates the separation of powers required by the Constitution.
“The deal between JP Morgan and the DOJ stemmed from allegations that the bank had knowingly misrepresented the quality of mortgage-backed securities that it sold. Since the deal’s on-paper costs evaporate under scrutiny — JPM can write almost the entire thing down on its taxes, costing less than half of what the DOJ claimed — the settlement has drawn a great deal of criticism since it was announced last fall. Better Markets echoed those criticisms in its statement on the lawsuit, accusing the government of “using the large dollar amount to blind everyone to the reality that they have disclosed no meaningful facts about what JP Morgan Chase did.”
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