Congress takes on White House funding of advocacy groups

WASHINGTON—The House of Representatives passed a bill Wednesday to block the White House from channeling bank settlement funds to allied advocacy groups.

“We found that the Department of Justice is systematically subverting Congress’ spending power by requiring settling parties to donate money to activist groups,” said Rep. Bob Goodlatte, R-Va., the legislation’s primary sponsor. “It is time for Congress to end this abuse.”

In 2012, the Department of Justice (DOJ) created a working group to investigate and prosecute instances of bad financial dealings. During a two-year investigation, the House Judiciary Committee, which Goodlatte chairs, discovered the DOJ directed banks to donate millions to a select few advocacy groups instead of individual homeowners harmed during the recession. On Wednesday, the House passed the Stop Settlement Slush Funds Act of 2016 241-174 to block the DOJ from requiring banks to donate money to third-party groups as part of settlement agreements.

Goodlatte said on the House floor Wednesday whether the DOJ allocated funds to worthy beneficiaries or not was beside the point; it is bad policy for the federal government to extend financial assistance to groups to further their agendas.

When the Justice Department introduced the program in 2012, President Barack Obama said the initiative would keep those who broke the law accountable, help homeowners recover from the recession, and diffuse the era of recklessness by Wall Street that enabled the 2008 downturn.

Shortly thereafter, the DOJ’s working group began striking deals with big American banks, taking them to court and working out settlement deals to pay up for their unethical behavior.

As recently as April, the DOJ reached a $5.1 billion settlement with Goldman Sachs, and in February Morgan Stanley agreed to a $3.2 billion resolution. In 2014, the DOJ reached the largest civil settlement in U.S. history with Bank of America for $16.65 billion.

Large portions of those settlements went toward “consumer relief,” which was intended to help homeowners recover after the economic downturn, but the Judiciary Committee’s investigation found it was unclear how much money actually went to individual victims.

The only bank to reveal its benefactor list, Bank of America, showed millions of dollars stuffed liberal leaning groups’ coffers. Since 2014, the bank has donated more than a million dollars to the National Urban League and $1.5 million to National Council of La Raza, which advocates for Latino Americans and sides with the Obama administration on issues such as immigration.

The DOJ enabled banks to donate to the groups by providing incentives. If the banks donated to the groups they received more than double the credit. Bank of America’s $1.15 million donation to the National Urban League counted as $2.6 million against the bank’s settlement. Likewise, its $1.5 million to La Raza takes $3.5 million off the total amount owed.

During floor debates for the bill on Wednesday, Rep. Hank Johnson, D-Ga., called on his colleagues to vote against it because he said the groups receiving money were doing good work for downcast Americans.

“This bill will have potentially disastrous repercussions,” Johnson said. “These entities are acting on behalf of people who were harmed.”

Johnson diverted talks away from the Settlement Slush Funds Act, claiming Congress has better things to do such as providing funding for the Zika virus and passing gun control legislation.

“Obama has already said he will veto this bill if it comes to his desk, so this is a waste of time,” Johnson said. “This is nothing more than a Republican messaging bill.”

Goodlatte retorted, saying the Constitution states Congress should be the appropriator of funds and neither Republicans nor Democrats could dispute that.

He said the Judiciary Committee verified that funds from Bank of America to more than 80 beneficiaries accounted for an average of 10 percent of their annual budget in 2015.

Speaker Paul Ryan, R-Wis., praised the passage of the bill as a way to keep the executive branch accountable.

“Here is a classic case of bureaucrats in this administration putting their interests above those of the people they serve,” Ryan said. “Taking settlement money from victims and funneling it to left-wing activists isn’t just wrong—it’s illegal.”