Congressman: DOJ funneled housing crisis money to immigrant activists

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House Financial Services Committee member Rep. Sean Duffy, R-Wis., said "Instead of trying to help more people who were harmed by the downturn, [DOJ] instead decided to line the pockets of third-party groups." (AP Photo/Susan Walsh)

By JOEL GEHRKE • 5/20/16 11:56 AM

Justice Department officials used unusual bank settlements to fund liberal activist groups without the consent of Congress, rather than help the victims of the housing crisis, according to congressional investigators.

"Instead of trying to help more people who were harmed by the downturn, they instead decided to line the pockets of third-party groups," House Financial Services oversight subcommittee Chairman Sean Duffy, R-Wis., told reporters Friday morning in a call hosted by Cause of Action.

The DOJ bank settlements have attracted suspicion in both chambers of Congress, where Republicans have practical concerns about where the money went, as well as constitutional problems with how the Justice Department came up with a plan to extract money from banks that it could use without having to go through a congressional appropriations process.

Senate investigators are especially frustrated with how the Justice Department circumvented Congress and the law. "The DOJ used the threat of litigation — and the corresponding financial and reputational costs — to cause the banks to take actions that a court would not have ordered them to do," according to a report issued late Thursday by Senate Homeland Security Committee Chairman Ron Johnson, R-Wis. "The use of these settlements to create incentives for shaping broader housing policy shows a disregard for separation of powers considerations inherent in the U.S. Constitution."

Rather than have the settlement money be placed in the U.S. Treasury, at which point it would be subject to congressional authority, DOJ and the Department of Housing and Urban Development gave the banks the option of sending money to an approved list of third-party groups.

"The DOJ also incentivized banks to donate to these third-party organizations rather than to pay the entire settlement directly to aggrieved homeowners," according to a report from Johnson, which was released late Thursday. "Specifically, both the Citigroup and Bank of America settlement agreements include provisions providing a two-for-one credit for donations to third-party groups. For example, every dollar the bank donates to a HUD-approved housing counseling agency, it receives two dollars in credit towards its total settlement obligation."

That incentive structure allowed the Obama administration to funnel money to activist groups that support favored political causes, such as La Raza, which received $1.5 million from the Bank of America alone. "The group has garnered attention from some lawmakers as being particularly extreme in its views on immigration — with some suggesting that La Raza promotes illegal immigration and advocates for benefits and driver's licenses for undocumented immigrants," Johnson's report noted.

Not every group approved to receive money has such liberal leanings, but federal officials made certain that no group with conservative beliefs would benefit from the settlements. "There is correspondence that makes it clear that there was an effort to structure the language to prohibit conservative groups from being considered on the list to receive money from banks that participated in the settlements," Duffy told reporters.

http://www.washingtonexaminer.com/co...rticle/2591878

We have something similar going on at the local level where the county sued a mortgage registry company, received $6 million, which they may plow back into "affordable housing." No doubt any such program would also be managed by selected bureaucrats. It really should go to the taxpayers, since it was the county government in general which experienced the loss. But of course they will divert it into another redistributionist scheme.