(CN) - A nonprofit advocate for stricter financial regulations has asked a federal judge to unravel JPMorgan Chase's secretly negotiated $13 billion settlement with the U.S. government.
The historic agreement gives JPMorgan Chase "complete civil immunity" for its illegal conduct regarding the packaging of "toxic subprime mortgages" and contribution to the worst financial crisis since the Great Depression, according to the complaint filed in Washington on Monday.
Better Markets sued the Justice Department and Attorney General Eric Holder, seeking declaratory and injunctive relief for violations of the Administrative Procedures Act.
The Department of Justice announced the deal with Chase on Nov. 19, 2013, the "largest settlement with a single entity in American history," according to the complaint.
"More than 300% larger that the next largest settlement amount with a single entity, which was just $4 billion," the settlement also included a $2 billion Financial Institutions Reform, Recovery, and Enforcement Act penalty, the largest in history, Better Markets claims.
"This contract was the product of negotiations conducted entirely in secret behind closed doors, in significant party by the Attorney General personally, who directly negotiated with the CEO of JP Morgan Chase, the bank's 'chief negotiator,'" the 60-page lawsuit states. "No one other than those involved in those secret negotiations has any idea what JP Morgan Chase really did or got for its $13 billion because there was no judicial review or proceeding at all regarding this historic and unprecedented settlement. However, it is known that JP Morgan Chase's $13 billion did result in almost complete nondisclosure by the DOJ regarding JP Morgan Chase's massive alleged illegal conduct."
Better Markets also highlighted the lack of any identification in the press release and "statement of facts," drafted and jointly released by the bank and DOJ, of a single person, the number of individuals involved in illegal conduct, material details, specific laws that were violated, the monetary amount lost, investor damages or, even, the immunity period granted to JP Morgan Chase by the Justice Department.
"As a result, no one has the ability to determine if the $13 billion agreement is fair, adequate, reasonable, and in the public interest or if it is a sweetheart deal entered into behind closed doors that, by design, intent, or effect, let the biggest, most powerful, and well-connected bank in the U.S. off cheaply and quickly for massive illegal conduct that contributed to the financial crisis and the economic disaster it caused. Indeed, one could argue that the $13 billion payment was for making sure no one ever learns the scope and detail of JP Morgan Chase's illegal conduct," the complaint states.
Better Markets also included an estimate that the financial crisis would cost the United States between $13 trillion and $38 trillion.
It seeks a declaration stating that the $13 billion agreement, without seeking judicial review or approval, violates the Administrative Procedures Act and the separation of powers doctrine.
The nonprofit also seeks a permanent injunction preventing the enforcement of the agreement until a court can further review all the facts and "determine whether the $13 billion agreement meets the applicable legal standard of review."
It is represented by Dennis Kelleher in Washington.
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