Justice’s Liberal Slush Fund Legal settlements are being used to funnel millions to left-wing activists like La Raza. By Kimberley A. Strassel
http://www.wsj.com/articles/justices-liberal-slush-fund-1449188273
Republicans talk often about using the “power of the purse” to rein in a lawless Obama administration. If they mean it, they ought to use their year-end spending bill to stop a textbook case of outrageous executive overreach.
This scandal comes courtesy of the Justice Department, which for 16 months has engaged in a scheme to undermine Congress’s spending authority by independently transferring dollars to President Obama’s political allies. The department is in the process of funneling more than half-a-billion dollars to liberal activist groups, at least some of which will actively support Democrats in the coming election.
It works likes this: The Justice Department prosecutes cases against supposed corporate bad actors. Those companies agree to settlements that include financial penalties. Then Justice mandates that at least some of that penalty money be paid in the form of “donations” to nonprofits that supposedly aid consumers and bolster neighborhoods.
The Justice Department maintains a list of government-approved nonprofit beneficiaries. And surprise, surprise: Many of them are liberal activist groups. The National Council of La Raza. The National Urban League. The National Community Reinvestment Coalition. NeighborWorks America (which awards grants to left-leaning community organization groups, and has been compared with Acorn).
This strategy kicked off with the $13 billion J.P. Morgan settlement in late 2013, though in that case the bank was simply offered credit for donations to nonprofits. That changed with the Citigroup and Bank of America settlements, which outright required $150 million in donations. The BofA agreement contains a provision that potentially tees up nonprofit groups for another $490 million. Several smaller settlements follow the same mold.
To further induce companies to go the donation route, Justice considers these handouts to be worth “double credit” against penalty obligations. So while direct forms of victim relief are still counted dollar-for-dollar, a $500,000 donation by BofA to La Raza takes at least $1 million off the company’s bill.
The purpose of financial penalties is to punish, and to provide restitution to real victims. The Justice Department would make the case that this money is flowing to groups that aid the targets of supposed banking abuse, such as homeowners. But that assumes the work these groups do is targeted at actual victims—which it isn’t. It assumes that the work these groups do in housing is nonpartisan—which it isn’t. And it ignores that money is fungible. Every dollar banks donate to the housing arms of the Urban League or La Raza is a dollar those groups can free up to wage an assault on voter ID laws, or to help out Democrats.
This is the Obama administration riding roughshod over the most basic of congressional powers—those of spending and oversight. Adding to the insult, Justice is routing money back to programs that congressional Republicans deliberately stripped of funds. In 2011 Republicans eliminated the Housing Department’s $88 million for “housing counseling” programs, which spread around money to groups like La Raza. Congress subsequently restored only $45 million, and has maintained that level. These bank settlements pour some $30 million into housing counseling groups, thereby essentially restoring all the funding.
It’s also a classic Obama end run around the law. House Judiciary Chairman Bob Goodlatte, who has spent a year investigating and pushing back against Justice’s slush fund, has noted that the Miscellaneous Receipts Act requires money received by the government from any source to be deposited in the Treasury. Directing banks to give money to third parties is a slippery way of evading that statute.
He’s also noted that Justice’s own internal guidelines discourage donations to third parties, precisely because of the risk it “can create actual or perceived conflicts of interest and/or other ethical issues.” No kidding. Mr. Goodlatte has discovered that some of the activist groups that stood to benefit from these transfers were involved in getting the requirements put into the settlements. He’s called on Justice to end the practice, and the department’s response has been to double down.
Which is why Mr. Goodlatte crafted a one-sentence amendment to the annual appropriations bill for Justice, one that strips the department of money if it continues with its slush-fund ruse. His amendment passed easily on a voice vote this summer.
Yet Justice has aggressive Democratic defenders in the Senate, who strongly oppose including the provision in the final, year-end omnibus. And some Senate Republicans seem willing to oblige them. Which is nuts.
The GOP is currently wrangling with Democrats over which policy riders to include in that final bill, and that’s well and good. But the Goodlatte amendment is so germane as to be obvious. It goes to the heart of the question at hand—spending—and to Congress’s right to control the national purse. If Republicans are interested in containing a president who routinely ignores the rules, here’s a place to stand.
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