Republicans claim payout from big-bank settlements being steered toward 'special interests'

House Republicans are accusing the Obama administration of letting millions of dollars from recent mortgage-lending settlements go toward politically favored advocacy groups, in turn "shortchanging" the people originally harmed by the financial crisis.

The separate deals were reached with the Justice Department in summer 2014, with Citigroup agreeing to pay $7 billion for misleading investors over mortgage-backed securities and Bank of America paying $16.65 billion for similar actions.

But of the $24 billion, roughly $150 million is tabbed for financial-counseling agencies -- a category that includes liberal-leaning groups such as the National Council of La Raza.

While some Americans likely will need help figuring out how to recover money through the settlement -- help these organizations could give -- Republicans on the House Judiciary Committee are questioning why certain activist groups are on the Department of Housing and Urban Development-approved list.

“The Obama administration is shortchanging victims by using these settlements to send money to their pet projects rather than allowing it to go to directly to the people who were harmed in the first place,” House Judiciary Committee Chairman Bob Goodlatte, R-Va., told on Monday.“Furthermore, the administration is also abusing the separation of powers by using these cases to funnel money to their preferred special interests in an attempt to do an end run around Congress, which the Constitution grants the power of the purse.”

Goodlatte pointed specifically to groups such as La Raza and NeighborWorks America -- a network of community development organizations that his office compared to the defunct, controversial low-income advocacy group ACORN.(ACORN disbanded in 2010 after losing government funding amid a controversy over misconduct captured in hidden-camera videos. NeighborWorks is not affiliated and has declined to even work with groups that are.)

Goodlatte said the settlement deal also could result in banks having to pay an additional half-billion dollars to the “controversial activist groups.” A House Judiciary subcommittee will hold a hearing Thursday on the matter.

Concerns about the HUD-approved groups have been raised since at least 2012, when the agency announced the release of $42 million for mortgage counseling, with groups like La Raza and the National Urban League being eligible service providers.

The Urban League received $1 million and La Raza received roughly $1.7 million from HUD, according to the conservative website

La Raza supports administration-backed, comprehensive immigration-reform legislation that would provide a pathway to citizenship for an estimated 11 million illegal immigrants and President Obama's recent executive actions that suspended deportation for millions.

La Raza’s nonprofit 501(c)4 group, the NCLR Action Fund, spent $147,521 exclusively on Democratic candidates during the 2014 election cycle.

Group spokeswoman Lisa Nauarrete said Monday that La Raza, though, has been an approved counselor since the first Bush administration and has yet to "receive a dime" of settlement money.

"The argument seems terribly speculative to us," she said. "And the amount is less than 1 percent [of the settlement]. That's a minuscule part."

Goodlatte and House Financial Services Committee Chairman Jeb Hensarling, R-Texas, have been pursuing issues related to the settlements since last year, including sending a letter in November to Attorney General Eric Holder requesting additional information about the “questionable terms” of the deal.

The Justice Department did not return a request Monday for comment on the eligible groups and the deal itself.

Documents provided to by HUD show hundreds of national and local housing-counseling groups are approved by the agency for settlement money.

A La Raza affiliate was listed in at least five states and the District of Columbia. A NeighborWorks group was listed in five states, and a National Urban League group was listed in nine.

Goodlatte and Hensarling also have raised concerns about the incentive structure in the settlements with Citigroup and Bank of America, which were preceded by a similar one in 2013 with JP Morgan for $13 billion. They argue the deals have an incentive clause in which banks earn $2 worth of credit for every dollar donated to the groups above a certain threshold, compared with a dollar-for-dollar credit for government-mandated consumer relief.

“This makes donations to activist groups far more attractive to banks than providing relief to injured consumers,” Goodlatte and Hensarling said in their 2014 letter to Holder. “As a result, the settlement appears to serve as a vehicle for funding activist groups rather than as a means of securing relief for consumers actually harmed.”