Republicans Seek Answers from Holder About Bank Settlement Money for Liberal Groups
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The Justice Department’s massive mortgage settlements against two bank giants requires them to give millions to liberal advocacy groups, and House Republicans are trying to find out why.
House Judiciary Committee Chairman Bob Goodlatte (R-Va.) and House Financial Services Chairman Jeb Hensarling asked Attorney General Eric Holder seeking details about who was involved in steering the funds from the Bank of America and Citigroup settlements this way, which they said was an unprecedented departure from other settlements.
“It seems that the alleged victims are not the primary beneficiaries of these multi-billion dollar settlements,” the House chairmen said in the letter. “Instead, the terms in the Justice Department’s two latest settlements look less like consumer relief and more like a scheme to funnel money to politically favored special interest groups.”
The two groups singled out by the congressmen were the National Council of La Raza and Neighbor Works America; these groups fund a national network of community organizers, according to the letter.
Justice Department spokesman Patrick Rodenbush told TheBlaze, “I can confirm DOJ has received the letter, but the department has no comment at this time.” The Justice Department did not immediately reply to phone and email inquiries from TheBlaze.
Citigroup reached a $7 billion deal with Justice in July, and Bank of America reached a $16 billion settlement in August.
The settlements provide incentives to give even more to the nonprofit groups.
Under the Citigroup settlement, a minimum of $50 million must be donated to community organizing groups as NeighborWorks and La Raza. Every dollar donated above the $50 million minimum, Citigroup earns a $2 credit off its its $2.5 billion consumer relief commitment, which makes up a portion of the $7 billion settlement.
The Bank of America settlement requires the bank to contribute $100 million to housing-related organizations, including counseling agencies, “legal aid” organizations and community development “non-profits.” For each dollar Bank of America gives to a nonprofit group, it gets a $2 credit off of its $7 billion consumer relief obligation.
Other types of consumer relief, such as loan modifications, earn only dollar-for-dollar credit. “This makes donations to activist groups far more attractive to banks than providing direct relief to injured consumers,” Goodlatte and Hensarling contend. “As a result, the settlements appear to serve as a vehicle for funding activist groups rather than as a means of securing relief for consumers actually harmed.”
The letter points out that the DOJ’s settlement with J.P. Morgan Chase last year included only direct forms of consumer relief. Further, while a settlement during the George W. Bush administration allowed any funds remaining to go to a third party, such funding was not earmarked or incentivized.
Among the questions the letter asks are, “Were non-profits that stood to gain involved in any manner in that decision? If so, which ones and to what extent?” and “Were any White House officials involved in the decision? If so, who and to what extent?”
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