A lawsuit brought by a nonprofit against the U.S. Department of Justice over its $13 billion toxic mortgage settlement with JPMorgan Chase (JPM) is no more, after a federal judge ruled that the group lacked standing in the case.
Better Markets, a reform group founded in 2010,sued the DOJ in February 2014, stating that by agreeing to the settlement with Chase, the DOJ violated the U.S. Constitution and U.S. laws by using a “mere contractual agreement to resolve claims of historic importance without subjecting the agreement to independent judicial review.”
According to a report from Reuters, Judge Beryl Howell accepted a motion for dismissal filed by the DOJ, which argued that the group did not have cause to sue.
From the Reuters report:
"The plaintiff has failed to meet its burden to show it has suffered an injury in fact," Howell wrote in her opinion, filed on Wednesday in the District Court for the District of Columbia.
In its suit, Better Markets charged the DOJ of acting as “investigator, prosecutor, judge, jury, sentencer, and collector, without any check on its authority or actions, even though the amount is the largest in the 237-year history of the United States.”
Better Markets argued in the run-up to the financial crisis, JPMorgan Chase engaged in pervasive fraud in the packaging and sale of thousands of mortgage-backed securities loaded with subprime loans to investors.
Better Markets said that employees, managers, and potentially high-level executives of JPMorgan Chase knew that the securities were riddled with toxic loans, but allegedly concealed the truth from investors when they marketed and sold the securities.
But Judge Howell ruled that Better Markets failed to sufficiently demonstrate any harm that came to it and tossed the lawsuit.
Unsurprisingly, Better Markets is unhappy with the decision.
“The court never considered or ruled on the merits of our lawsuit that DOJ did not have the unilateral authority to settle years of JP Morgan Chase’s egregious illegal conduct without independent judicial review,” Better Markets’ President and CEO Dennis Kelleher said.
“The decision sadly stands for the proposition that there are no checks and balances when it comes to Executive Branch action to settle any case on any terms without any meaningful transparency, public accountability or oversight by anyone,” Kelleher continued.
Better Markets previously identified five specific issues with the JPMorgan Chase settlement:
1: HISTORIC CLAIMS
The agreement resolved claims of pervasive fraud that contributed to the worst financial crash since 1929 and the worst economy since the Great Depression of the 1930s.
2: LARGEST AMOUNT EVER
The settlement amount was the largest in U.S. history from any single entity by more than 300%. But not enough is trickling down to the little guy.
3: HIGH-LEVEL NEGOTIATORS
The Attorney General and other senior DOJ political appointees negotiated directly and entirely in secret with the CEO of JP Morgan Chase, someone who was considered a possible Treasury Secretary just a few years ago.
4: $10 BILLION PHONE CALL
The cellphone of DOJ’s third-highest ranking official rang with the “familiar” phone number of JP Morgan Chase’s CEO, who called to offer billions of dollars to stop DOJ from holding a press conference and filing a lawsuit in just a few hours. The call worked, and the press conference and lawsuit were both called off.
5: UNPRECEDENTED AGREEMENT
DOJ gave complete civil immunity to JP Morgan Chase for defrauding thousands in exchange for $13 billion, via a contract that was negotiated and finalized in secret without any review or approval by a federal court.
Despite the dismissal of the lawsuit, Better Markets said it is not done fighting yet.
“This procedural ruling makes clear that the lawsuit is not deficient, the law is: no one has standing to challenge DOJ’s actions even when senior political appointees secretly negotiate legal immunity in exchange for a $13 billion payment from the country’s largest, most politically connected too-big-to-fail Wall Street bank for inflating the subprime housing bubble, which lead to the worst financial crash since 1929,” Kelleher said.
“Such backroom deals should not be allowed in a democracy worthy of its name,” he concluded. “We will be carefully evaluating the court’s opinion before determining our next steps.”
(H/T Reuters)
