Stop Settlement Slush Funds Act of 2016

Floor Speech

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Mr. NADLER. Mr. Chairman, I rise in strong opposition to the so- called Stop Settlement Slush Funds Act.

The Republican majority likes to put creative names on their legislation, but what they call slush funds are really voluntary settlements between the government and corporate wrongdoers. These settlements sometimes include payments to third parties to address the generalized harms caused by corporate bad actors. But this bill would prohibit any payments to a third party unless the funds would be used to help only the people directly harmed by the defendants, not those who may have been harmed on a broader level by their actions. This is unnecessarily narrow and restrictive when trying to address the harm inflicted by corporate wrongdoers.

Furthermore, the bill would restrict the flexibility of the government to resolve claims and make it harder to assist broad categories of people who are hurt by corporate malfeasance. For example, in the wake of the mortgage foreclosure crisis, the Department of Justice sued several big banks responsible for egregious misconduct that threw millions of people out of their homes and put millions more in peril, while the banks reaped massive profits. The banks agreed to resolve their claims by paying record-setting fines to the government in recognition of the tremendous damage they had caused. Under well- established legal authority, some of these settlements also included payments to certain community organizations responsible for assisting homeowners and the communities devastated by the foreclosure crisis caused by the banks.

These payments have had a dramatic effect. In New York State, thanks to the consumer relief funds from these settlements, more than 60,000 people have received housing counseling and legal services free of charge over the last 4 years. Almost one-third of these homeowners have consequently received a mortgage modification or have one pending.

Other funds have gone to support community development institutions like land banks, which are nonprofit organizations formed by local and county governments. These land banks help cities address vacant and abandoned properties known as zombie homes, zombie homes that were created by the foreclosure crisis caused by the malfeasance of the big banks. Land banks acquire these properties, secure them, and rehabilitate them for resale as affordable housing, thereby increasing the tax rolls, reducing crime, and preserving property values for neighboring homeowners and undoing some of the damage done by the malfeasance of the banks. In just the last 3 years, land banks in New York have acquired more than 1,300 vacant and abandoned properties.

Mr. Chairman, homeowners and cities are still struggling with the aftermath of the foreclosure crisis, and the third-party donations included in legal settlements have proven vital in helping those directly affected and those secondarily harmed by the banks' actions. These payments were mutually agreed-upon terms in a legal settlement, but Republicans call them slush funds. They went to nationally recognized community organizations or locally important community organizations doing important work to help homeowners in crisis, in crisis because of the actions by the malefactor banks.

The majority sneers and calls these organizations activist groups. The majority was so outraged by these payments that they launched a burdensome investigation that yielded not a single shred of evidence of any wrongdoing by anyone. I don't know what the majority calls that, but I call it a waste of time.

Mr. Chairman, this legislation is a waste of time, too, and I urge my colleagues to vote ``no.''

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