July 25, 2014

STAND BY FOR MORE HARD DRIVE CRASHES: Issa asks Holder to turn over docs on mortgage fraud settlements.

The chairman of the House Oversight Committee asked Attorney General Eric Holder Thursday to turn over documents related to the Justice Department’s decisions to settle mortgage fraud accusations against two of the nation’s biggest banks.

Rep. Darrell Issa (R-Calif.) wants to see documents and internal communications relating to November’s record $13 billion settlement with JPMorgan Chase and this month’s $7 billion agreement with Citigroup.

Both cases involved allegations that the banks helped precipitate the 2008 economic crisis by selling risky mortgage securities to investors who were led to believe the underlying loans were solid.

Holder touted the settlements, announcing that billions of dollars would be directed to programs to help homeowners hurt by the downturn — and stressing that the banks admitted wrongdoing.

But Issa notes that the agency’s handling of the cases was different from others, in which formal charges were filed. In a letter to Holder, Issa cited cases involving the firms Credit Suisse AG and BNP Paribas SA, which each netted billions in penalties.

“The Department’s inclination to enter into settlement agreements with respect to mortgage securities fraud stands in marked contrast to the Department’s litigation strategy in other contexts,” Issa wrote to Holder.

Issa’s review of the DOJ’s litigation policies follows criticism from some Democrats, who say the department should more aggressively pursue criminal cases against bad actors in the financial industry.

Issa spokesman Frederick Hill cited “bipartisan frustration” with the department’s strategy. Among Republicans, he said, that frustration centers on the decision to resolve cases during pre-lawsuit settlement negotiations, before the administration is made to put all its cards on the table.

I’d be shocked, shocked to find there was political favoritism here.