DoJ diverts millions of dollars from housing fund to activist groups

The Department of Justice has diverted tens of millions of dollars slated for victims of the 2008 housing meltdown to groups politically and ideologically allied with the Obama administration.

According to Rep. Sean Duffy, chairman of the House Financial Oversight Committee, the money comes from billions in penalties paid by big banks.  DoJ diverts about 3% of the cash to registered counseling groups who are supposed to advise consumers.  Most of the groups are connected to liberal activist organizations.

Daily Caller:

“The first objective of a settlement is to make sure that we have victims who are made whole,” Duffy said, referring to millions of Americans who lost their homes during the meltdown that led to the Great Recession of 2009. “If you’re diverting money away from victims and sending it to third-party activist groups, you have victims who are being harmed not just once, but a second time.”

Justice officials were long able to “skim 3 percent of any settlement money into their own account to for the most part spend it the way they see fit,” Duffy told participants in the media briefing hosted by the Cause of Action Institute, a nonprofit legal watchdog group.

Which groups are the benficiary of this slush fund? 

Among the political activist groups favored favored by the settlements is La Raza, the nation’s largest Hispanic activist organization that routinely supports Democratic candidates and causes. Cecilia Munoz, a La Raza senior vice president, was appointed by Obama in 2012 to head the White House Domestic Policy Council.

La Raza is flush with money, reporting in 2013 to the IRS assets of $55 million. Janet Murguia, the group’s president and CEO was paid $417,000 that year, according to the group’s IRS tax return. Even so, La Raza is slated to receive at least $1 million from the Bank of America settlement and $500,000 from the Citigroup settlement.

Lisa Navarrete a spokeswoman for La Raza told The Daily Caller News Foundation that the group is one of 37 certified housing counseling agencies approved by HUD since 1998 during the Clinton administration. She said La Raza would pocket about 10 percent of the funds and the balance will go to local groups affiliated with La Raza to provide counseling for distressed Hispanic homeowners.

The Chicano Student Movement of Aztlan (MEChA) is also slated to receive $50,000 from the Bank of America settlement, according to Cause of Action.

In an oversight committee hearing held Thursday, Duffy said Justice officials in 2013 did not require mandatory donations to third party groups when it announced a record $13 billion mortgage bank settlement with J.P. Morgan Chase.

The rules apparently changed in July 2014, because as part of a $7 billion settlement with Citigroup, Justice officials “required a minimum of $10 million in donations to HUD-approved housing counseling agencies,” Duffy said.

A February 2016 independent monitor report about a Bank of America settlement, obtained by TheDCNF, showed that $125 million had been “donated” by the bank in 2014 to 147 “community” groups and “housing counseling agencies.”

DoJ "incentivizes" the donations by giving the banks a $2 tax credit for every dollar they give to the fund.  What a nice, cozy little scheme, eh?

Hundreds of millions of dollars being funneled to political allies should be illegal and unconstitutional.  It is certainly unethical.  When executive departments can make up their own rules and use money received outside the appropriations process in any way they choose, we have a government that's out of control.