A non-profit group filed suit today over a record $ 13 billion settlement between the US Justice Department and JPMorgan Chase concerning high-risk mortgage securities it sold ahead of the housing bust.
Better Markets, an NGO that advocates for US financial market reform, filed suit in a federal court in Washington, asking for judicial review of what it called an "unprecedented" agreement, demanding an injunction to prevent its enforcement until then.
"This contract was the product of negotiations conducted entirely in secret behind closed doors, in significant part by the attorney general personally, who directly negotiated with the CEO of JP Morgan Chase," the NGO said in its suit.
"No one other than those involved in those secret negotiations has any idea what JP Morgan Chase really did or got for its $ 13 billion because there was no judicial review or proceeding at all regarding this historic and unprecedented settlement," the court document said.
The group believes the Department of Justice's actions were "a violation of the separation of powers doctrine" that outlines the spheres of legislative, executive and judicial influence in the United States.
As a result Better Markets is seeking "an injunction preventing the DOJ from enforcing the $ 13 billion agreement unless and until the DOJ submits the $ 13 billion agreement to a court."
In mid-November the Department of Justice reached a settlement in which JPMorgan Chase would pay a record $ 13 billion to settle a litany of lawsuits over high-risk mortgage securities it sold as safe bets ahead of the housing bust.
The deal included $ 9 billion in payments to authorities and $ 4 billion in relief to consumers -- mainly homeowners -- harmed by the conduct of JPMorgan and the two failed banks it took over during the crisis, Bear Stearns and Washington Mutual.
The agreement marked the largest ever deal signed between US authorities and an individual company.