STOP SETTLEMENT SLUSH FUNDS ACT HELPS RESTORE CHECKS AND BALANCES
WASHINGTON—This op ed by Congressman Collins (R-Ga.) first appeared in The Hill on February 9, 2017.
The recent shift in administrations has, on at least one count, unified people at both ends of the political spectrum. As I’ve walked the halls of Congress over the last months, I’ve heard harmony in the refrains of Democrats and Republicans alike as they oppose various decisions proceeding from the Executive or its agencies. Whether a decision comes from the Environmental Protection Agency, Department of Labor or Department of Justice, there is an overarching battle cry against executive overreach.
In sorting through allegations that the executive branch has colored outside the lines, I would like to commend the Constitution as a trustworthy guide to achieving a balance of power and one whose bias leans toward the electorate.
Consider with me the Stop Settlement Slush Funds Act, which addresses the Justice Department’s (DOJ) penchant for directing millions of dollars to special interest groups, snubbing Article 1—which grants appropriations authority to an elected Congress—and the people it’s meant to empower.
The DOJ, under the previous administration, instructed and incentivized defendants to dole out millions to third parties with no connection to the cases being adjudicated. In a move that was as clever as it was improper, the DOJ required settling parties to donate money as part of a resolution—the DOJ could not legally redistribute money from defendants to special interest groups itself, and so it told defendants to contribute to particular groups directly.
Recent mortgage lending settlements illustrate the flimflam well. Major banks entered into settlements with the DOJ wherein hundreds of millions of settlement dollars went not to victims, nor to the Treasury, but to third-party groups. In 2013’s JP Morgan settlement, the DOJ induced the bank to donate to community redevelopment organizations as part of its settlement obligations. Emboldened, the DOJ required Citi and Bank of America to give $150 million to housing groups in 2014. When Congress continued loan modification tax-exemptions, Bank of America’s $490 million payment, which was reserved for victims of potential tax liabilities, bypassed the Treasury and went to two non-government groups that fund legal aid—per the DOJ’s instruction.
These cases may seem innocuous at first glance. After all, what’s wrong with requiring ostensibly bad actors to donate to good causes as a form of penance and repentance?
Unfortunately, we can’t assume that the beneficiaries here are noble or politically neutral. Some may be, yet the National Council of La Raza received over $1 million in grants under a mortgage lending settlement and describes itself as “engaged in some of the most controversial issues of our time” as an integral part of its “mission.”
The U.S. Attorney’s Manual discourages, for this reason, any mandatory defendant-funded donation “because it can create actual or perceived conflicts of interest and/or other ethical issues.”
Despite this, the DOJ rewarded certain activist groups that lobbied for donations, pitting these groups against victims by making settlement payments a zero-sum game. When paying down their settlement obligations, defendants received dollar-for-dollar credit for money directed to victims and double credit for third-party gifts.
In proper settlement agreements, defendants may pay money to victims directly, to DOJ victims funds, or to the U.S. Treasury, through which Congress can direct the funds, as is its Article 1 prerogative. Since 2014, however, the DOJ has directed over $3 billion in settlements to third parties, despite the fact that these organizations suffered neither direct nor proximate harm. In legal terms, the interest groups were not victims.
In ethical terms, the DOJ became a victimizer. By turning settlement payments into lobbyist chum, the DOJ disenfranchised victims.
The DOJ also muffled the voice of the people by circumventing the appropriations process. The Constitution grants the power of the purse to the branch that is most accountable and accessible to voters, while the DOJ funneled donations to groups, like the Department of Housing and Urban Development, whose funding had been specifically cut by elected representatives.
This species of executive overreach is menacing for two reasons, and the Stop Settlement Slush Funds Act addresses both. By blocking settlement terms that include mandatory payments to third parties, the bill reprioritizes actual victims and reestablishes Congressional (read: democratic) oversight in federal spending.
Tolerating settlement slush funds for special interests is like giving a mouse a cookie. With cookie in hand, the DOJ will certainly want a glass of milk . . . or another multi-million-dollar contribution to a political fringe group.
The DOJ takes its cues from the president, meaning that the moral of the story is universal: If you’re searching for the constitutional nirvana that comes with three checked, balanced, and complementary branches of government, you’ll be one step closer with the Stop Settlement Slush Funds Act in place.