By Peter Schroeder - 02/10/14 01:05 PM EST
A reform group that advocates tougher rules for Wall Street is mounting a legal challenge against the Justice Department’s record settlement with JPMorgan.
The group, Better Markets, charges that the $13 billion settlement is a "sweetheart deal" that fails to hold the bank accountable for its actions in the run-up to the financial crisis.
“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, the group’s president and CEO. “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.”
While financial industry groups have launched a number of legal challenges in recent years over regulations, Monday’s lawsuit appears to be the first of its kind challenging the government on behalf of reformers.
The group argues the agreement fails to provide a proper public accounting of what JPMorgan did wrong before the financial crisis. And while the $13 billion settlement may have set a new record for a government deal against a single institution, the group also claims it is paltry compared to the damage done in the financial meltdown.
Kelleher argued the government was using that eye-popping figure to “blind everyone to the reality that they have disclosed no meaningful facts about what JP Morgan Chase did. … The American people deserve, and the law requires, an independent judicial review to determine whether the settlement is fair."
Better Markets is calling on the courts to throw out the November settlement and prevent the Justice Department from following through with it until a court review is completed.
Under the settlement, JPMorgan agreed to admit it made “serious misrepresentations” to the public about several mortgage-backed securities leading up to the financial crisis.