The federal government reached a historic $13 billion settlement with JPMorgan in November. But a lawsuit from a financial reform group wants to torpedo that deal, claiming it let the lending giant off the hook too easily
The historic November settlement was the largest in US history. As part of the settlement deal, the nation’s largest bank was required to acknowledge that it made “serious misrepresentations” to the public about “numerous” residential mortgage-backed security transactions, according to a statement released by the Justice Department. JPMorgan will also be required to provide relief to underwater homeowners as part of the deal. The settlement didn’t preclude the possibility that JPMorgan or its employees could face criminal charges.
But that isn’t good enough for Better Markets, Inc., a nonprofit that promotes financial reform. In February Better Markets challenged the settlement for granting what it called “blanket civil immunity” to the lender “for years of alleged pervasive, egregious and knowing fraudulent and illegal conduct that contributed to the 2008 financial crash and the worst economy since the Great Depression.”
“The Wall Street bailouts were bad enough, but now taxpayers are being forced to accept a secretive backroom deal that may well have been another sweetheart deal,” said Better Markets President and CEO Dennis Kelleher said in February. “The Justice Department cannot act as prosecutor, jury and judge and extract $13 billion in exchange for blanket civil immunity to the largest, richest, most politically-connected bank on Wall Street. The executive branch does not have this unilateral power because it violates the constitutional requirement of checks and balances.”
Justice Department lawyers said Monday that Better Markets lacked standing to sue, insisting that it had the authority “to settle claims of the United States.” The DOJ also said that reopening the case against JPMorgan would be an expensive proposition, potentially taking billions of dollars in relief away from distressed homeowners.
But Kelleher said in a statement that the settlement had the effect of concealing the full extent of JPMorgan’s wrongdoing from the American public.
“The executive branch through DOJ simply cannot, on its own and without any review or approval by anyone, including the courts, cut such an historic deal and leave the American public in the dark,” he said.