In November, JPMorgan Chase (JPM) agreed to pay $13 billion to settle claims of mortgage-backed securities fraud brought against the bank by the U.S. government. Now, the U.S. Department of Justice is using some of that money to speed up its cases against other big banks, like Bank of America (BAC) and Citigroup (C), according to a report from Reuters.
Reuters reports, citing people familiar with the matter, that the U.S. Attorney’s offices that have been the most vigilant in pursuing banks over their loan practices have received funds to hire new civil prosecutors.
The increased activity is a sign that President Barack Obama is trying to follow through on his 2012 pledge to hold more banks accountable for their role in the housing crisis, after prosecutors faced criticism for little high-profile action. Attorney General Eric Holder has also expressed a desire to wrap up more of mortgage securities-related cases this year.
"There is a widespread recognition that the banks have not yet been held fully accountable for their origination practices and the harm that did to borrowers, investors and the American economy in general," said Don Hawthorne, a partner with Axinn, Veltrop & Harkrider in New York who has represented clients in mortgage-backed securities litigation.
The Justice Department's portion of the JPMorgan settlement went to the U.S. Treasury, but the department can keep up to three percent of money it collects for other federal agencies to use for certain purposes. The DOJ settlement with JPMorgan also resolved lawsuits from other agencies, including the Federal Deposit Insurance Corporation.
Reuters reports that in an effort to accelerate the investigations, the Justice Department has been spreading the work among U.S. Attorney offices with experience in similar cases. In one instance, an investigation of Goldman Sachs has been moved from the U.S. Attorney’s office in Philadelphia to Sacramento, which worked on the JPMorgan Chase case.