Banks required to provide “donations” to government-approved third parties
Washington D.C. – Cause of Action Institute (CoA Institute) today filed a complaint in the U.S. District Court for the District of Columbia against the United States Department of Housing and Urban Development (HUD) for failing to produce records about its role in the federal government’s multi-million dollar agreements with big banks over their allegedly faulty residential mortgage securities practices. HUD has failed to produce relevant documents for more than a year after CoA Institute filed a Freedom of Information Act (FOIA) request for information.
Cause of Action Institute President & CEO, and former federal judge, Alfred J. Lechner, Jr.: “Taxpayers deserve to know why the money from these agreements is going to third parties and not being returned to the Treasury Department. The Obama administration should be held accountable when agencies like HUD make decisions behind closed doors and fail to produce timely relevant documents in accordance with the law.”
Starting in 2013, the Department of Justice (DOJ) in collaboration with HUD and other agencies entered into a series of agreements with three large banks to resolve potential federal and state legal claims that these institutions knowingly sold billions of dollars in faulty residential mortgage-backed securities to investors prior to and during the 2008 financial crisis. These agreements contain so-called consumer relief provisions requiring or permitting that banks provide “donations” to government-approved third parties in lieu of paying funds to settle the federal claims into the U.S. Treasury.
CoA Institute, a nonprofit legal watchdog organization, has led efforts to investigate these controversial agreements. Last year, CoA Institute issued multiple public records requests aimed at exploring whether the federal government was authorized to encourage or force banks to steer funds to these third-party groups that support various initiatives backed by the Obama administration. One of these requests was submitted to HUD on July 8, 2015.
HUD has failed to respond or produce any documents in response to CoA Institute’s request. Recent evidence uncovered by the House Financial Services Oversight & Investigations Subcommittee, chaired by Congressman Sean Duffy, indicates that these agreements were structured, in a DOJ-HUD collaboration, with, in Chairman Duffy’s words, a “keen eye to make sure conservative groups could not access any money through these settlements.”
CoA institute is suing to force HUD to respond to its request and to get to the bottom of these issues.
- Cause of Action Institute’s full complaint with exhibits is available HERE.
