The Moral Liberal

Obama DOJ and HUD Ignore Freedom of Information Act Requests on Effort to Extract $20 Billion from Banking Industry

(Washington, DC) – Judicial Watch, the organization that investigates and fights government corruption, announced today that it filed a Freedom of Information Act (FOIA) lawsuit on January 3, 2012, against the Obama Department of Justice (DOJ) and U.S. Department of Housing and Urban Development (HUD) to obtain documents pertaining to accusations of fraud against the nation’s five largest mortgage companies and the creation of “federal accounts” to settle probes into faulty mortgage practices (Judicial Watch v. HUD and DOJ (No. 1:12-cv-0002)). The Obama administration has reportedly been engaged in settlement negotiations behind closed doors with mortgage companies that would result in at least $20 billion in payments from the nation’s major banks.

Pursuant to a Judicial Watch FOIA request filed with the DOJ and HUD on May 17, 2011, Judicial Watch seeks the following records:

• A set of government audits used to support allegations that the nation’s five largest mortgage companies of defrauding taxpayers in the handling of foreclosures on homes purchased with government-backed loans.

• A term sheet which outlined the Obama administration’s settlement offer to the mortgage companies accused of fraud. The terms described on this document allegedly included the creation of a federal account funded by the nation’s largest mortgage firms to help distressed borrowers avoid foreclosure and settle state and federal probes into alleged faulty mortgages practices.

The DOJ notified Judicial Watch by letter that the agency received the FOIA request on May 27, 2011. Under the law, a response from the DOJ was due within twenty working days, or by June 24, 2011. On September 22, 2011, the DOJ reported to Judicial Watch that it had located nine documents totaling 346 pages responsive to the FOIA request, but had referred the documents to HUD for processing and direct response.

A similar FOIA request was filed with HUD, also on May 17, 2011. According to a letter from HUD, the request had been received on May 18, 2011, which means that the response was due by June 16, 2011. On September 13, 2011, HUD indicated in a letter to Judicial Watch that under instruction from the DOJ “the records responsive to your request are being withheld in full…”

As Judicial Watch noted in its FOIA requests, in his “exclusive” May 16, 2011, article detailing the settlement negotiations with mortgage lenders, Huffington Post reporter Shahien Nasiripour referred specifically to the audits and the term sheet at issue in Judicial Watch’s FOIA lawsuit. According to the article, four federal agents briefed Nasiripour on the “set of confidential audits,” while the confidential term sheet “was reviewed” by the Huffington Post.

In addition to conducting behind-the-scenes negotiations with the mortgage lending industry, the Obama administration is also reportedly pressuring state attorneys general to close down their investigations and sign off on the deal. Judicial Watch previously obtained documents calling into question the veracity of testimony by Elizabeth Warren, a then-Obama administration official, about the involvement of the new Consumer Production Financial Bureau in these negotiations.

“All Americans deserve to know the full truth about the Obama administration’s effort to extort $20 billion from the nation’s banking industry,” said Judicial Watch President Tom Fitton. “This is another example of the federal ‘gangster government’ – in this case, the selective leaking of information to harm targeted businesses while denying access under law to the full truth.  This is an affront to transparency and the rule of law. It is this type of gamesmanship that has resulted in the Obama administration’s transparency crisis.”

Used with the permission of Judicial Watch.