Washington, D.C.—House Judiciary Committee Chairman Bob Goodlatte (R-Va.) delivered the following remarks during the House Judiciary Committee’s markup of H.R. 732, the Stop Settlement Slush Funds Act of 2017.
Chairman Goodlatte: Last Congress, this Committee commenced a “pattern or practice” investigation into the Justice Department’s mortgage lending settlements. We found that DOJ is systematically subverting Congress’s spending power by requiring settling parties to donate money to activist groups.
In its last two years, the Obama Justice Department directed nearly a billion dollars to third-parties entirely outside of Congress’s spending and oversight authority. In some cases, these mandatory donation provisions reinstated funding Congress specifically cut.
The Spending Power is one of Congress’s most effective tools in reining in the Executive Branch. This is true no matter which party is in the White House. A Democrat led Congress passed the Cooper-Church Amendment to end the Vietnam War. More recently, bipartisan funding restrictions blocked lavish salary and conference spending by federal agencies and grantees.
This policy control is lost if the Executive gains unilateral authority over spending.
Serious people on both sides of the aisle understand this. A former deputy Assistant Attorney General for the Office of Legal Counsel in the Clinton Administration warned in 2009, that DOJ “has the ability to use settlements to circumvent the appropriations authority of Congress.” In 2008, a top Republican DOJ official restricted mandatory donation provisions, because they “can create actual or perceived conflicts of interest and/or other ethical issues.”
Any objections to this bill would be unfounded. Whether the beneficiaries of these donations are worthy entities is entirely beside the point. The Constitution grants Congress the power to decide how money is spent, not DOJ. This is not some esoteric point. It goes to the heart of the Separation of Powers theory and Congress’s ability to rein in Executive Overreach in practice.
Nor does the bill restrict prosecutorial discretion. That discretion pertains to the decision to prosecute. Setting penalties and remedial policy is the proper purview of Congress.
Opponents’ central concern is that there may be cases of “generalized harm” to communities that cannot be addressed by restitution. But this misses the fundamental point. DOJ has authority to obtain redress for victims. Federal law defines victims to be those “directly and proximately harmed” by a defendant’s acts. Once those victims have been compensated, deciding what to do with additional funds extracted from defendants becomes a policy question properly decided by elected representatives in Congress, not agency bureaucrats or prosecutors. It is not that DOJ officials will always be funding bad projects, it is that, outside of compensating actual victims, it is not their decision to make.
Rather than suspend the practice of mandatory donations in response to these bipartisan concerns, the Obama DOJ doubled down.
DOJ’s recent settlement with Volkswagen required the company to spend $2 billion to fund an Obama Administration electric vehicle initiative for which Congress had twice refused to pay.
DOJ’s January 18, 2017 settlement with Credit Suisse required the bank to spend 240 million credit dollars financing affordable housing projects. Because the projects must be financed at below-market rates, the bank is given credit for the losses associated with the financing. In other words, the financing is effectively a donation in the guise of a loan.
It is time for Congress to end this abuse.
The “Stop Settlement Slush Funds Act of 2017” bars mandatory donation terms in DOJ settlements. It is a bipartisan bill.
It makes clear that payments to provide restitution for actual harm, directly caused, including harm to the environment, are permitted.
Do not be fooled by opponents’ scare tactics. They claim that the legislation could prohibit conduct remedies used in settlements covering workplace discrimination, harassment and consumer privacy. The bill does not preclude such remedies. Nothing bars DOJ from requiring a defendant to implement workplace training and monitoring programs. The ban on third-party payments merely ensures that the defendant remains responsible for performing these remedies itself, and is not required to outsource set sums for the work to third-parties who might be friendly with a given administration.
This bill addresses an institutional issue. That is one reason similar language passed the House last Congress by voice vote. I thank all of the bill’s cosponsors and I urge its passage.
Click here to learn more about today’s markup.