Senate looks into mortgage settlement “slush fund”

The Department of Justice under President Donald Trump may have halted the channeling of monies from an alleged “slush fund” but the Senate wants more answers about how mortgage settlement funds from behemoth banks were used under the Obama administration.

Senate Judiciary Committee chair Sen. Chuck Grassley (R-Iowa) has opened an inquiry into the multibillion-dollar mortgage settlement funds that were sent to unaffiliated third parties, which the Republicans dubbed a “slush fund” operation, according to a HousingWire report.

The settlements in question specifically come from Bank of America, which settled with the government for almost $17 billion; Citigroup, which settled for $7 billion; and JPMorgan Chase, which settled for $13 billion. The settlements were over the banks’ pre-crisis business practices.

Attorney General Jeff Sessions has ordered an immediate halt to the practice of channeling the funds to organizations that are not in any way connected to government operations earlier this month.

Grassley is following up on the action with a senate inquiry that seeks to shed light to the beneficiaries of the funds and how they were used by these organizations.

A letter by the senator alleged that $640 million from these settlements was “directed to third-party organizations instead of being deposited into the US Treasury or paid to individuals who suffered harm.”

Democrats reportedly defended the practice, saying the funds went to legitimate housing organizations and other groups, but former Rep. Frank Guinta (R-N.H.) accused the former administration of supporting “left-wing activist organizations” with the funds.

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