May 20 The U.S. government urged a federal judge
to throw out a lawsuit seeking to scuttle its landmark $13
billion settlement with JPMorgan Chase & Co, rejecting a
claim that the accord let the largest U.S. bank off too easily.
Better Markets Inc, a nonprofit critical of Wall Street, had
in February accused the government of "unilaterally" engineering
a backroom accord giving JPMorgan "blanket civil immunity" for
selling shoddy mortgage securities before the financial crisis.
It said this violated the constitutional separation of
powers and called for a judge to review the November settlement.
The accord included a $2 billion fine payable to the U.S.
Department of Justice. The Better Markets case was prompted by
the department's decision not to make its accusations public in
a lawsuit before settling with JPMorgan.
In a court filing on Monday night, however, the Justice
Department said its decision to settle was "presumptively"
unreviewable, and that Better Markets lacked standing to sue.
The department also rejected Better Markets' suggestion that
it had "abdicated" its law enforcement duties by not driving a
harder bargain with JPMorgan and chief executive Jamie Dimon.
It noted that the civil settlement was the largest in U.S.
history, dwarfing the $3 billion that JPMorgan once proposed,
and that reopening it could take billions of dollars from people
it was meant to help: troubled homeowners.
The Justice Department's power "to settle claims of the
United States is undiminished, and that includes 'the power to
make erroneous decisions as well as correct ones,'" the
department said, citing a 1928 U.S. Supreme Court decision.
"Plaintiff's claim that DOJ's decision to settle was
arbitrary and capricious, or an abuse of discretion, must ...
fail," it added.
Dennis Kelleher, chief executive of Better Markets, in a
statement said the filing "doubles down on secrecy" by
concealing the "full truth" of JPMorgan's wrongful activity.
"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," Kelleher said.
The JPMorgan accord earmarked $4 billion for homeowners
harmed by the New York-based bank and two others it had bought,
Bear Stearns Cos and Washington Mutual Inc, and $9 billion to
resolve federal and state claims.
Justice Department officials have also held talks with Bank
of America Corp, the No. 2 bank in the United States, to
settle claims over that lender's sale of mortgage securities,
people familiar with the matter have said.
On Monday, Credit Suisse Group AG became the
largest bank in two decades to plead guilty to a U.S. criminal
charge, admitting to conspiring to aid tax evasion and agreeing
to pay $2.6 billion in penalties.
The case is Better Markets Inc v. U.S. Department of Justice
et al, U.S. District Court, District of Columbia, No. 14-00190.
(Reporting by Jonathan Stempel in New York; Additional
reporting by Aruna Viswanatha in Washington, D.C.; Editing by