August 21, 2013, 10:11 AM
- Bloomberg, Sen. Elizabeth Warren
Massachusetts Democrat Sen. Elizabeth Warren wants more details from the Justice Department about a 2012 settlement reached between states and the federal government with the country’s biggest mortgage servicers, she told Attorney General Eric Holder in a letter on Wednesday, bluntly adding that it’s critical the government “avoid settling on the cheap” in enforcement cases.
Servicers including Bank of America BAC +0.04% and J.P. Morgan Chase JPM -0.92% agreed to pay a total of $25 billion to resolve claims arising from illegal foreclosure practices. As part of the settlement, they paid$225 million to be released from False Claims Act liabilities stemming from submission of fraudulent mortgage-insurance claims to the Federal Housing Administration.
Among other things, Warren wants an explanation of how the DOJ and other parties arrived at the $225 million figure. She says “a better deal for taxpayers” would have helped the FHA’s finances and tells Holder she’s concerned the settlement “might be yet another example of the federal government’s timid enforcement strategy against the nation’s largest financial institutions.”
“Settlements are important and play a necessary role in any enforcement regime, but it is critical that the government take steps to maximize its leverage and avoid settling on the cheap,” she writes.
Warren told Holder she wants a response by the end of September.