Ever wonder what happens to the money collected by the government in multimillion or billion dollar settlements with banks?
Some GOP House members believe that this money goes to politically-favored groups that qualify as “friends of” the White House.
The House Judiciary Subcommittee is holding a hearing on this Thursday.
If it turns out that this is the case, then we can think of it as a counterpoint to the IRS’ giving particular scrutiny to politically-unfavored groups that the White House wishes would vamoose.
Just as the IRS treatment of conservative-leaning groups may have had an influence on the outcome of the 2012 presidential campaign, if this cash is going to organizations friendly to the administration, it likewise gives them a great deal more clout that can be used on behalf of President Obama's causes.
The money is not inconsequential: Citigroup paid $7 billion after the Department of Justice charged that it had mislead over mortgage-backed securities, while Bank of America forked over $16.65 for similar accusations. I bet you thought this money was going to pay down the deficit? It just disappears into a federal maw, and so it is good that the House is holding hearings to find out where it ends up.
But of the $24 billion, roughly $150 million is tabbed for financial-counseling agencies — a category that includes liberal-leaning groups such as the National Council of La Raza.
While some Americans likely will need help figuring out how to recover money through the settlement — help these organizations could give — Republicans on the House Judiciary Committee are questioning why certain activist groups are on the Department of Housing and Urban Development-approved list.
“The Obama administration is shortchanging victims by using these settlements to send money to their pet projects rather than allowing it to go to directly to the people who were harmed in the first place,” House Judiciary Committee Chairman Bob Goodlatte, R-Va., told FoxNews.com on Monday.“Furthermore, the administration is also abusing the separation of powers by using these cases to funnel money to their preferred special interests in an attempt to do an end run around Congress, which the Constitution grants the power of e purse.”
Goodlatte pointed specifically to groups such as La Raza and NeighborWorks America — a network of community development organizations that his office compared to the defunct, controversial low-income advocacy group ACORN.(ACORN disbanded in 2010 after losing government funding amid a controversy over misconduct captured in hidden-camera videos. NeighborWorks is not affiliated and has declined to even work with groups that are.)
Goodlatte said the settlement deal also could result in banks having to pay an additional half-billion dollars to the “controversial activist groups.” A House Judiciary subcommittee will hold a hearing Thursday on the matter.
HUD-approved groups have taken in a walloping $42 million for mortgage counseling since 2012. A spokesman for La Raza’s polical arm, which spent $147,521 to promote Democratic candidates in the 2014 midterms, said that the group, approved to counsel since the Bush administration, has not received money from DOJ settlements. La Raza affiliates in five states are approved to receive such money.
While the GOP is right to investigate where this settlement money goes, it would be good to also take a look at where it comes from. The charges lodged against the banks are arcane and most people don’t feel it necessary to come out in defense of big banks. Still, it would be nice to know if the government is legitimately pursuing these banks for real wrongdoing or just harassing them with funds for pet projects in mind.