H.R. 732, the “Stop Settlement Slush Funds Act of 2017,” would prohibit the federal government from entering into or enforcing any settlement agreement requiring donations to remediate harms that are not “directly and proximately” caused by a wrongdoer’s unlawful conduct.
I oppose H.R. 732 for several reasons.
To begin with, the bill would prohibit these types of settlement agreements even though they have been successfully used to remedy various harms, particularly those caused by reckless corporate actors.
For example, these settlement agreements helped facilitate an effective and comprehensive response to the predatory and fraudulent mortgage lending activities of financial institutions that nearly caused the economic collapse of our Nation and that led to the Great Recession.
In fact, settlement agreements with two of these culpable financial institutions—Bank of America and Citigroup—required a donation of less than 1% of the overall settlement amount to fund foreclosure prevention and remediation programs to help harmed consumers.
Contrary to the Majority’s claim, the Justice Department did not use any of these settlement agreements to fund “activist groups.”
Notwithstanding the production of hundreds of pages of documents by the Justice Department, along with hundreds of pages of documents produced by private parties, we have not seen a shred of evidence that the government included unlawful or politically motivated terms in its settlement agreements with Bank of America or Citigroup.
The Majority also asserts that these settlement agreements are used by the Justice Department and other agencies to circumvent the congressional appropriations process.
But, existing law already prevents agencies from augmenting their own funds. By law, donations included in settlement agreements must have a clear nexus to the prosecutorial objectives of the enforcement agency.
And, both the Government Accountability Office and the Congressional Research Service have concluded that settlement agreements providing for secondary remediation do not violate Congress’ constitutional power of the purse.
Finally, H.R. 732 would prevent the remediation of systemic harms in civil and criminal enforcement actions.
These settlement agreements allow parties to resolve their civil or criminal liability by voluntarily remediating the harms caused by their unlawful conduct.
For some types of unlawful conduct—such as discrimination based on race or religion—secondary remediation of harms may be the only remedy available for systemic violations of the law.
The victims of such conduct are typically not themselves parties to the underlying action.
Therefore, secondary remediation in the form of voluntary compliance and training programs serves as an important tool in these cases to protect victims of discrimination. Yet, H.R. 732 would effectively prohibit such relief.
Given these serious problems and others presented by the bill, I strongly oppose H.R. 732, and I reserve the balance of my time.
###
