Lights Out for DOJ’s Settlement Slush Funds

It’s no secret. During the last Administration, with the help of President Obama’s trusty pen and phone, the power of the executive branch frequently stretched beyond the separation of powers defined by the United States Constitution.

One abuse of this power stems from the settlement slush funds doled out by the Department of Justice (DOJ) during the last Administration. Over the last few years, the House Judiciary Committee, which I chair, has conducted an extensive investigation into the Obama Administration’s mortgage lending settlements. In the aftermath of the 2008 financial crisis, certain financial institutions were required to pay settlements or fines as a form of restitution for their misdeeds. As a result of this investigation, we found that DOJ is undermining the spending power of Congress by requiring these institutions to make mandatory donations to left-leaning activist groups, like La Raza and NeighborWorks, as part of the settlement. 

This practice is wrong no matter which party is in power. Just a few days ago, Attorney General Jeff Sessions took a big step in restoring accountability to the DOJ by announcing his decision to halt the use of these settlement slush funds to pay non-victim third parties. Whether the beneficiaries of these donations are worthy entities or not is entirely beside the point. It is not the decision of federal bureaucrats to make. The Constitution is clear: Congress has the power to decide how money is spent. When DOJ recovers money from parties who have broken the law, those funds should rightly be awarded to victims or sent back to Treasury, not funneled to special interests. 

While this practice has seen its demise for now, it is important that Congress act to guarantee that no future Administration can continue this abuse. Earlier this year, I introduced the Stop Settlement Slush Funds Act to bar DOJ, and all other government agencies, from requiring defendants to donate money to outside groups as part of their settlement agreements with the government. The legislation passed the Judiciary Committee in February and is the same legislation that passed the House last year. I hope it will come before the House soon to permanently end this practice. 

I am proud to be leading the fight in the House to ensure recovered funds are used to benefit direct victims and not special interests – these are the positive reforms we need to keep strong separation of powers working. Click here to read more in my weekly column.