Senate Judiciary Committee chair wants answers on where all the mortgage settlement money went

Sen. Grassley asks DOJ to consider clawing back funds

Earlier this month, the Trump administration’s Department of Justice put a stop to an Obama administration tactic of dictating that some companies send settlement funds to unaffiliated third parties, a practice that Republicans criticized as a “slush fund” operation.

Several top Republicans, including House Financial Services Committee Chairman Jeb Hensarling, R-TX, said that the Obama administration used the settlements to funnel hundreds of millions of dollars to Democrat-friendly organizations.

Attorney General Jeff Sessions may have ordered an immediate halt to the practice earlier this month, but another top Republican now wants answers on which organizations got the settlement funds, what the organizations did with the money, and wants the DOJ to potentially claw some of that money back.

In a letter sent to Sessions this week, Sen. Chuck Grassley, R-Iowa, the chair of the Senate Judiciary Committee, asks for the DOJ to provide information on the Obama administration’s settlement agreements that sent money to the unaffiliated third party organizations.

In Grassley’s words, the Obama administration used the practice “on multiple occasions to circumvent the congressional appropriations process by funneling money to politically active organizations and thereby effectively restore funding to organizations that Congress deliberately defunded.”

Grassley specifically calls out three of the DOJ’s largest settlements over crisis-era mortgage practices, Bank of America’$16.65 billion settlement, Citigroup’s $7 billion settlement, and JPMorgan Chase’s $13 billion settlement, which each included requirements that the banks send money to third parties.

According to Grassley’s letter, at least $640 million from those settlements was “directed to third-party organizations instead of being deposited into the U.S. Treasury or paid to individuals who suffered harm.”

The Bank of America settlement, for example, included a stipulation that required the bank to make donations to “community development funds, legal aid organizations, and housing counseling agencies to assist individuals with foreclosure prevention and to support community reinvestment and neighborhood stabilization and provide financing for affordable rental housing with a focus on family housing in high-cost areas.”

And while Democrats contend that the money went to fair housing organizations and other legitimate groups, some Republicans argue that the money went to “left-wing activist organizations,” a phrase used by Rep. Frank Guinta, R-NH.

Grassley writes that he previously asked the DOJ under the Obama administration for information on the money from these mortgage settlements, but said that his office did not receive a “fully responsive document production from the previous administration”

So Grassley is asking the DOJ for information on all settlement agreements reached during the Obama administration that involved payments to non-governmental third parties.

Specifically, Grassley wants the following information about each settlement that included a payment to an unaffiliated third party:

  • A copy of the settlement agreement and any attendant documents directing a settling defendant to pay a sum of money to any non-governmental third party
  • The total amount required to be paid by a settling defendant to non-governmental third parties
  • The list of non-governmental third parties from which the settling defendant was allowed to choose as recipients for required payments
  • Which organizations the settling defendant selected as recipients for the required payments
  • How much the settling defendant was required or elected to pay to each selected non-governmental third party
  • To date, a full accounting of what payments have been made to non-governmental third parties
  • Any payments that were made to the federal government but which have already been, or are intended for, distribution by the federal government to non-governmental third parties for purposes other than restitution to a victim or directly remedying the harm that is sought to be redressed

Additionally, Grassley wants the DOJ to consider clawing back some of that money from the third parties.

“Finally, please provide a detailed explanation as to whether any payments during this time period, as directed by the Department between settling defendants and non-governmental third parties, could lawfully be rescinded and re-directed back into the General Fund of the U.S. Treasury,” Grassley writes.

Grassley wants the DOJ to provide answers to his questions by June 28.

8 Responses

  1. Big Banks are lying thieves

  2. Why isn’t anyone asking what happened to the money that went to the government? Or why in CA Governor Brown stole $330M meant to defend homeowners, lost a lawsuit over it — but the judge said he could not force him to give it back?

  3. Violations of the Anti- deficiency Act in which some of the settlements by DOJ didn’t include contracting parties who would be the buyer and sellers of property. Consumer relief per se very generic!! Mostly Identity Theft by Banks and Government against homeowners!

  4. Sounds like Discovery we all the bank for but never receive. I have a trial. Nothing to date from Discovery had been produced. How is that handled in trial? What does the lawyer usually say to the judge?

  5. The money was stolen by most of the states to close their budget deficits. Foreclosured taxpayers be damned.

  6. Reblogged this on California freelance paralegal and commented:
    That is outrageous that the Obama administration diverted that much money to their political cronies. They need to do a full audit to determine exactly where all that money went.

  7. Well we are now in housing court being evicted because my husband of 30 years and father of my four children died of appendix cancer at 53 years old so now this disabled widow and children are ARE destroyed and about to be homeless so YES where did that money go?

    Sent from my iPhone


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