Obama-era cash for cronies under House fire

In 2014, the Justice Department settled two cases stemming from the financial crisis against Bank of America and Citigroup worth a combined $23.7 billion, $9.5 billion of which was supposed to go to so-called consumer relief. Shockingly, two of the big winners were the National Council of La Raza and the National Urban League which each scored more than a million dollars from the settlement.

Under the Obama Administration agreements, a good chunk of the massive cash awards ended up being given to third party activist groups as part of the settlement.

{mosads}The settlements were even structured to incentivize such big gifts to third parties, according to a 2014 joint letter by House Judiciary Committee Chairman Bob Goodlatte (R-Va.) and House Financial Services Committee Chairman Jeb Hensarling (R-Texas), who wrote to then-Attorney General Eric Holder, “for each dollar donated above the minimum, banks earn two dollars’ worth of credit against their overall consumer relief commitment.”

This diverted millions of dollars away from the supposed victims in the mortgage settlement cases, which they presumably should have been entitled to receive under the terms of the settlement.

In the Bank of America settlement alone, $84 million of donations to third party groups wiped out $194 million off the consumer relief portion of the tab, according the June 2016 report by the Washington Examiner’s Sean Higgins. Even though these third-party groups were not harmed at all, Obama’s Justice Department made certain some of their major supporters palms were greased with La Raza getting a $1.5 million payout just for being a friend of the President.

And make no mistake, it was not the punitive payout to the federal government that was impacted, but instead the payout to the identified victims of the mortgage crisis whose fund was raided on behalf of the politically connected “public interest groups.”

Legal proceedings by the government must never be used as shakedowns to enrich the coffers of any political cause, regardless of ideology. And while it is good that the Justice Department will now be headed by a man of the utmost character, Sen. Jeff Sessions (R-Ala.), the nation will not always be so fortunate.

Now, House Judiciary Committee Chairman Robert Goodlatte (R-VA) is wasting no time in closing the barn door from future abuse by pushing, H.R. 732, through his Committee. The Goodlatte bill ends this legal extortion of contributions to political activist groups and others from defendants during the settlement process.

The bill bars the government from “directing or providing for a payment to any person or entity other than the United States, other than a payment that provides restitution for or otherwise directly remedies actual harm (including to the environment) directly and proximately caused by the party making the payment, or constitutes payment for services rendered in connection with the case…”

In an emailed statement to Americans for Limited Government, Goodlatte explained the legislation, writing, “This bill is oversight and action. Congress must not tolerate Justice Department political appointees using settlements to funnel money to their liberal friends. This is also an institutional issue.  Once direct victims have been compensated, deciding what to do with additional funds recovered from defendants becomes a policy question properly decided by elected representatives in Congress, not agency bureaucrats or prosecutors.” 

Goodlatte’s legislation has been offered and passed in the House the past few years, but so far has not been enacted into law, but this year promises to be different.

As a perfect assertion of Congress’ Article One Constitutional prerogative and real victim protection from the political raiding of their rightful settlement dollars, it fits perfectly with President Donald Trump’s promise to drain the swamp and end this political crony corruption.

Rick Manning is the president of Americans for Limited Government.

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