Congressman Jeb Hensarling

Representing the 5th District of Texas

Hensarling Votes to Stop Obama’s Settlement Slush Funds

Sep 7, 2016
Press Release

WASHINGTON—Today, Congressman Jeb Hensarling (TX-05), Chairman of the House Financial Services Committee, voted for the Stop Settlement Slush Funds Act of 2016 (H.R. 5063). This bill stops the Department of Justice (DOJ), and all other agencies, from pushing defendants to donate money to favored political interest groups as part of settlement agreements with the federal government.

This legislation was the result of a 20-month House Judiciary Committee and House Financial Services Committee investigation into the DOJ.  It found the Department was systematically subverting Congress’ Article I power of the purse and diverting money from federal case settlements to left-wing activist groups that have supported President Obama’s political agenda—often times by giving companies significant breaks on the fines they are supposed to pay if they will funnel the money to their preferred political allies. 

“I might expect to see such a corrupt practice in a place like Russia,” said Rep. Hensarling. “But, in the United States of America?  How could this possibly be legal? These payments occur entirely outside of the transparent and accountable Congressional appropriations and oversight process— a clear violation of Congress’ Article I power of the purse, according to Article I, Section 9 of the Constitution.  By allowing for direct payments to non-victim, third-party political organizations, the Justice Department is trampling upon the Constitution, threatening due process, threatening separation of powers, and threatening checks and balances.  There is simply no justice to be found in the Obama Justice Department.”

The investigation by the House Judiciary Committee and the House Financial Services Committee found the DOJ used mandatory fines to direct as much as $880 million dollars to activist groups.  These payments occurred entirely outside the Congressional appropriations and oversight process. 

For example, in 2012, the DOJ forced Gibson Guitars to pay a $50,000 community service payment to the National Fish and Wildlife Foundation even though the foundation had no direct connection to the case.  In 2014, Bank of America was able to reduce a multi-billion dollar mortgage fraud penalty imposed by the DOJ by giving millions of dollars to liberal groups like National Urban League, The Neighborhood Assistance Corporation of America, and National Council of La Raza. The Stop Settlement Slush Funds Act of 2016 would end this practice by the Obama Administration by sending settlement funds to victims or the U.S .Treasury, rather than favored political groups.

“While self-righteously claiming to be ‘tough on the big banks’ and for ‘protecting consumers,’ the Obama Justice Department’s special deals for big banks actually give the banks double credit or more toward their penalties for each ‘donation’ made to the Administration’s political allies,” said Rep. Hensarling. “This means these big banks could erase potentially hundreds of millions of dollars in federal penalties this way—not to mention, avoid giving the money to actual victims.  Using cash to reward your political allies instead of helping victims who have been genuinely wronged is the absolute epitome of what is unfair and wrong about this Administration.”

H.R. 5063 passed the House 241 to 174 and now heads to the Senate for consideration. 

Congressman Hensarling delivered a speech on the House Floor in support of H.R. 5063.  To view the video of that speech click here.

The transcript of the speech is provided below:

“Mr. Chairman, our Constitution is under assault, so I rise today in support of H.R. 5063, the Stop Settlement Slush Funds Act.

“A nearly two-year long investigation—jointly conducted by the Financial Services Committee, which I have the privilege of chairing, and the Judiciary Committee chaired by Mr. Goodlatte, the sponsor of this legislation—has shockingly revealed that the so-called Justice Department is not only pushing, but even requiring, some defendants in settlements to send the fines not to victims, not to the U.S. Treasury, but instead to political allies of the Obama Administration.

“As one commentator wrote:  ‘Imagine if the President of the United States forced America’s biggest banks to funnel hundreds of millions – and potentially billions – of dollars to the corporations and lobbyists who supported his agenda.’

“Mr. Chairman, there’s nothing to imagine. It’s real.  It’s happening.

“Mr. Chairman, our Committees’ investigation uncovered that the Obama Justice Department has done exactly this.  They have used mandatory donations to direct as much as $880 million to political organizations that just so happen to be allies of the Obama Administration.

“Now, I might expect to see such a corrupt practice in a place like Russia…but, in the United States of America?  How could this possibly be legal?

“These payments occur entirely outside of the transparent and accountable Congressional appropriations and oversight process – a clear violation of Congress’ Article I power of the purse, according to Article I, Section 9 of the Constitution.  By allowing for direct payments to non-victim, third-party political organizations, the Justice Department is trampling upon the Constitution, threatening due process, threatening separation of powers, and threatening checks and balances. 

“Mr. Chairman, there is simply no justice to be found in the Obama Justice Department.

“I also note the sheer hypocrisy of what the Administration is doing.

“While self-righteously claiming to be ‘tough on the big banks’ and for ‘protecting consumers,’  the Obama Justice Department’s special deals for big banks actually give the banks double credit or more toward their penalties for each ‘donation’ made to their political allies.

“This means these big banks could erase potentially hundreds of millions of dollars in federal penalties this way—not to mention, avoid giving the money to actual victims. 

“Using cash to reward your political allies instead of helping victims who have been genuinely wronged is the absolute epitome of what is unfair and wrong about this Administration.

“I urge all Members to protect the Constitution and to vote for H.R. 5063, the Stop Settlement Slush Funds Act and I yield back the balance of my time.”