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 The record settlement, which was reached in November, does not
release JPMorgan from potential criminal liability over the
mortgages it packaged into bonds. But Better Markets said it was
still appalled that the settlement gave the bank "blanket civil
immunity" for its conduct without sufficient judicial review.
"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 Dennis Kelleher, chief executive
of Better Markets.
"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,"
he said.
Better Markets was founded in 2010 to advocate for tough Wall Street
reforms.
The lawsuit, which names the Justice Department and Attorney General
Eric Holder, was filed in federal court in Washington, D.C.
Better Markets is seeking to have the court prevent the Justice
Department from enforcing the settlement until a judge reviews it.
Justice Department spokeswoman Ellen Canale said the agency was
confident the settlement complied with the law. JPMorgan spokeswoman
Jennifer Zuccarelli declined to comment on the lawsuit.
Lawmakers and others have criticized the administration of U.S.
President Barack Obama for failing to hold Wall Street banks,
executives, and other parties accountable for the excesses that
resulted in the housing crisis.
The Justice Department in November negotiated a wide-ranging deal
with the largest U.S. bank that included a $2 billion civil penalty
to resolve Justice Department claims.
It also included a $4 billion consumer relief package, and a
separately negotiated $4 billion settlement with the regulator of
mortgage financiers Fannie Mae and Freddie Mac.
Another $1.4 billion of the $13 billion package resolved a lawsuit
from the National Credit Union Administration.
The settlement was released to the public, but not filed in federal
court.
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While the Justice Department enters into non-prosecution agreements
on the criminal side without filing them in court, it rarely enters
into similar out-of-court settlements over civil violations. The
agency also did not release a complaint that it had prepared to file
against JPMorgan before it negotiated the deal.
In its complaint, Better Markets claimed the settlement with the
bank lacked critical facts that could help justify the deal, such as
failing to name any individuals responsible for the wrongdoing, how
much damage investors had suffered or even "which specific laws were
violated."
"No one has any ability to determine if the $13 billion agreement is
fair, adequate, reasonable, and in the public interest or if this is
a sweetheart deal entered into behind closed doors," the complaint
said.
Kelleher, a former attorney at Skadden, Arps, Slate, Meagher & Flom,
has become well-known for his critique of both Wall Street banks and
regulators who he has often accused of failing to hold the banks
accountable for wrongdoing.
Kelleher announced the lawsuit during a press conference at the
National Press Club on Monday, armed with large posters including
one with photos of Holder and JPMorgan Chief Executive Officer Jamie
Dimon.
(Reporting by Sarah N. Lynch and Aruna
Viswanatha; editing by Karey Van Hall, Chris Reese, Toni Reinhold)
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