By Joel Gehrke
Justice Department officials forced Bank of America and Citigroup to donate to left-wing activist groups as part of a deal to end an investigation into the banks’ policies leading up to the 2008 financial crisis, according to congressional investigators.
A House panel is investigating the settlement, with a hearing set for next week. “Using bank settlements to funnel money to activist groups instead of consumers who were harmed is not only bad policy – it is a breeding ground for abuse and favoritism,” says House Judiciary Committee chairman Bob Goodlatte (R. Va.) in a joint statement with Representative Tom Marino (R., Penn.)
The settlements were hailed as landmark deals that would help people who lost money in the 2008 financial crisis. “One of the benefits of a resolution like this is we can actually begin to compensate public pension funds that were victims,” Associate Attorney General Tony West said when announcing the $16.5 billion settlement with Bank of America.
Yet, the settlement creates an incentive for the banks to donate to activist groups instead of consumers. “Eligible groups include La Raza and NeighborWorks, an organization that has been described as ‘fund(ing) a national network of left-wing community organizers operating in the mold of Acorn,’” according to the Judiciary Committee announcement. “In addition, banks earn two dollars worth of credit against their overall consumer relief commitment for donations above the minimum to activist groups. In contrast, direct forms of consumer relief such as loan modifications earn only dollar-for-dollar credit.”
Goodlatte and Marino cited the arrangement as evidence that “decisions made by the Justice Department increasingly reflect a culture of politics and games rather than nonpartisan justice.”
A House panel is investigating the settlement, with a hearing set for next week. “Using bank settlements to funnel money to activist groups instead of consumers who were harmed is not only bad policy – it is a breeding ground for abuse and favoritism,” says House Judiciary Committee chairman Bob Goodlatte (R. Va.) in a joint statement with Representative Tom Marino (R., Penn.)
The settlements were hailed as landmark deals that would help people who lost money in the 2008 financial crisis. “One of the benefits of a resolution like this is we can actually begin to compensate public pension funds that were victims,” Associate Attorney General Tony West said when announcing the $16.5 billion settlement with Bank of America.
Yet, the settlement creates an incentive for the banks to donate to activist groups instead of consumers. “Eligible groups include La Raza and NeighborWorks, an organization that has been described as ‘fund(ing) a national network of left-wing community organizers operating in the mold of Acorn,’” according to the Judiciary Committee announcement. “In addition, banks earn two dollars worth of credit against their overall consumer relief commitment for donations above the minimum to activist groups. In contrast, direct forms of consumer relief such as loan modifications earn only dollar-for-dollar credit.”
Goodlatte and Marino cited the arrangement as evidence that “decisions made by the Justice Department increasingly reflect a culture of politics and games rather than nonpartisan justice.”
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