Stop Settlement Slush Funds Act of 2023

Floor Speech

Mr. Speaker, I rise in opposition to H.R. 788, the so-called Stop Settlement Slush Funds Act of 2023.

This harmful legislation would prevent the Justice Department from negotiating settlements to include payments to third parties, primarily nonprofits and community-based organizations, that are best positioned to remedy harms to society at large that were caused by a corporate wrongdoer's violation of Federal environmental, labor, consumer, and financial protections.

This bill is nothing short of a gift to large corporations that would leave victims of their misconduct out in the cold.

No credible facts justify H.R. 788. This bill is based on the false premise that the Justice Department uses these types of settlements as illegitimate favors for an administration's political allies, with the bill's supporters describing such settlements as politically motivated slush funds.

This is an outlandish attack on a perfectly legal and constitutional type of remedy and is an argument that both the Government Accountability Office and the Congressional Research Service have thoroughly debunked.

Yet, House Republicans have spent countless hours and taxpayer dollars over several Congresses, going back at least a decade, chasing the conspiracy theory that the Justice Department is attempting to fund liberal activist groups and causes through negotiated settlements.

This included a multiyear investigation of the settlements that the Justice Department entered into with several big banks following the 2008 financial crisis, banks whose greedy appetite for mortgage-backed securities led to predatory lending practices that ultimately left millions of homeowners facing foreclosure. The big banks turned a blind eye to these practices, while they packaged mortgages that they knew were of questionable value as securities and sold them to individual and institutional investors alike.

Although the big banks' illegal conduct led directly to the 2008 financial crisis, it was difficult, if not impossible, for individual borrowers or homeowners to hold them legally accountable for the harms they suffered from the bank's near implosion of the Nation's financial system.

In response, roughly 1 percent--a tiny fraction--of the settlement monies in suits brought by the government ultimately went to third- party organizations specializing in aiding private homeowners to obtain mortgage relief or other related community services--a perfectly reasonable way to help remedy the harm caused by these large financial institutions' irresponsible behavior.

Unsurprisingly, the House Republican investigation into these settlements produced not one shred of credible evidence to support their allegations that this represented some sort of improper action--a common result when it comes to the majority's oversight priorities it seems.

Nonetheless, the majority seeks to enact H.R. 788, a bill that purports to address a problem that does not exist while its proposed solution would create real negative consequences for the American public.

Were Congress to pass H.R. 788, it would reward corporate lawbreakers and further victimize the families and communities suffering from the consequences of corporate misconduct, including injuries from civil rights violations, environmental justice harms, or harms caused by fraudulent lending practices.

During the Rules Committee hearing earlier this week, my colleagues on the other side began to argue that these settlements are, in fact, a sweet deal for corporate lawbreakers at the expense of the taxpayer. Nothing could be further from reality.

First, let us not lose sight of the fact that the majority of settlement funds go to the U.S. Treasury.

Second, these settlements enable Federal agencies to efficiently resolve enforcement actions. In many of the kinds of cases from which these types of settlements arise, litigation is complex, expensive, and time consuming. It could take the government years to hold wrongdoers accountable if they are unable to reach a settlement.

Justice delayed is justice denied. These settlements save the taxpayers millions of dollars in litigation costs, boosting the value of the settlements to the U.S. Treasury beyond the listed dollar figure, while at the same time providing more immediate relief for victims of corporate lawbreaking.

H.R. 788 is simply a tired attempt by the majority to paint a constitutional veneer upon their unpopular antiregulatory agenda, which includes enacting legislation that will undermine critical financial, environmental, public health, and safety protections for the American public.

This antiregulatory bill is a solution in search of a problem, designed to serve deep-pocketed corporate interests at the American people's expense.

It is a shame that House Republicans have chosen this unjustified and harmful bill as one of their first measures to bring to the floor in this new year. We could have started the new year by considering bipartisan legislation to address a real problem. At the same markup where the Judiciary Committee considered this bill, we also considered legislation that would have addressed bipartisan concerns about Federal civil asset forfeiture laws. That bill passed the committee by a 26-0 vote in favor, and I have no doubt we would have enjoyed strong bipartisan support on the floor.

Be that as it may, here we are, once again, at the precipice of a possible government shutdown, and House Republicans have chosen instead to waste time on H.R. 788, recycling an unnecessary bill that has no chance of passage in the Senate at a time when the House should be working expeditiously to ensure that the government stays open.

In short, rather than considering ill-conceived and harmful legislation, we ought to be devoting this first legislative week of the new year focused on serving the actual needs of the American people, which is the basic job that we were elected to do.

Mr. Speaker, I urge my colleagues to vote ``no'' on H.R. 788, and I reserve the balance of my time.

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Mr. NADLER. Mr. Speaker, the gentleman from Texas and the gentlewoman from Wyoming are simply wrong as they describe the situation.

In all of these settlements, the Federal Government is given money, the bulk of the money. It doesn't go to a third-party group. A small fraction then goes to a small group to help make the victims of the fraud or the malfeasance somewhat whole, but the Federal Government gets the bulk of the funds in the first place.

It is a two-part payout. The Federal Government gets most of the funds, and then a third party helps some of the victims get a little part of the funds.

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Mr. NADLER. Jackson Lee).

Ms. JACKSON LEE. Mr. Speaker, I thank the ranking member of the full committee and the manager of this presentation on the floor for dealing with H.R. 788.

Mr. Speaker, I rise to save lives. This baffles me when good work is being done and has been done over the years. No one has complained about misconduct of the recipients of the settlement funds helping people who have been impacted negatively, sometimes with irreparable harm. They are assisted by a number of organizations making a difference.

Rather, we want to go forward with the corporate unaccountability act, making this an unreasonable attempt and unconstitutional attempt by Members on the other side to stop protecting victims and protect wrongdoers, which is a continuation of the dangerous behavior that has brought about this settlement.

What do Americans look to their Federal Government for? They look to the government to be their rock, their anchor in times of natural disasters, man-made and otherwise. They look to their government in times of war and peace for us to defend this Nation. They certainly look to make sure that in the normal comings and goings of their work with their families, their communities, that someone is looking out for them. That is what the settlement opportunities give to our various agencies.

This would allow the continued work, rather than the taking away of these dollars from legitimate groups that are helping to make life better. This weakens the Federal Government's ability to settle these issues. It takes away the idea of legal aid and legal aid organizations being able to help individuals without access to legal assistance. It helps develop community banking, financial institutions. It gives housing opportunities to those who have been taken advantage of.

We know that we are in a condition of toxic air and toxic contamination in our neighborhoods, and what does the ability to settle the disaster that has been created do? It tells those offenders this is how they make the community whole. This is how they save lives.

I know it well in Fifth Ward, Texas, and the surrounding areas. For a long time, a corporate offender contaminated the soil. They were growing plants and flowers, so whole neighborhoods had an epidemic of cancer. There were whole generations that lived around this particular toxic site, but it was only the Federal Government--the EPA, in particular--under the Biden administration that came in and got a handle on this and insisted that the health needs of these individuals, the cleanup needs of these individuals, was going to be taken care of.

Ms. JACKSON LEE. Mr. Speaker, I thank the gentleman from New York, the ranking member, for yielding additional time.

This is not that s-word. I don't even want to say it because it means that it is something wrong. This is a good settlement opportunity that will help the public in fighting against bad actors. It will work on improving the criminal justice system, bankruptcies, the environment, civil rights laws, the Fair Housing Act, and the Servicemembers Civil Relief Act.

This is a pathway to disaster. That is what H.R. 788 is. Don't be fooled, Mr. Speaker. What we want to do is help the American people and eliminate H.R. 788, which is going to take away the tools to be able to help them.

Mr. Speaker, I started out by saying we want to save lives, and that is what we want to continue to do in these dastardly conditions that have happened all over the Nation. We want the Federal Government to be standing next to Americans and to be able to help them.

Mr. Speaker, I include in the Record a letter from several organizations that oppose H.R. 788. January 8, 2024. Re Oppose H.R. 788--The Prevention of Community Restoration Act.

Dear Representative: We urge you to oppose H.R. 788, the so-called ``Stop Settlement Slush Funds Act of 2023''. The bill prohibits settlement agreements where the United States is a party from including certain ``donations'' to non- federal actors, primarily non-profits, educational, and community-based organizations.

Under existing laws, settlements from federal enforcement actions can include payments to third parties to advance programs that assist with recovery, benefits, and relief for communities harmed by lawbreakers, to the extent such payments further the objectives of the enforcement action. H.R. 788 would cut off any payments to third parties other than individualized restitution and other forms of direct payment for ``actual harm.'' That restriction would handcuff federal enforcement officials by limiting the ability of federal enforcement officials to negotiate real relief for harms caused to the public by illegal conduct that is the subject of federal enforcement actions.

This bill would be a gift to lawbreakers at the expense of families and communities suffering from injuries that cannot be addressed by direct restitution because the bill would prevent federal agencies from negotiating forms of relief that would address injuries to the public that may be either non-quantifiable or indeterminate. These forms of relief are crucial when harm is difficult to monetize, such as damage to the environment, the collateral consequences to communities resulting from predatory lending by financial institutions, or unknown health outcomes to individuals resulting from chemical exposures in the workplace.

Under current law, the legitimacy and utility of federal enforcement settlements that include payments to third parties is clear, as long as such payments bear a nexus to the prosecutorial objectives of the agency. This bill would supplant the wisdom of officials at DOJ and federal agencies to craft appropriate remedies.

This bill is also just another example of Congressional overreach into executive branch decision-making. Not only does it disregard the needs of future Administrations, but the bill is sloppily crafted, failing to provide even a basic definition of the ``donations'' or payments in question.

Further, the bill assumes that the government is always going to be the party seeking to enforce the law, but this is a fallacy. Laws are often enforced against the government, and the government sometimes pays restitution to litigants. There is a role for third parties to ensure that settlements involving the government are followed and enforced.

Third parties that receive third-party payments include nonprofits, community organizations, or trusts or foundations that provide vital services in their communities. Members of Congress should applaud the good work of these organizations that serve the public good rather than vilify them.

We urge you to oppose H.R. 788. Sincerely,

Yosef Robele & Brielle Green, Earthjustice, American Association of Justice, American Federation of State, County and Municipal Employees (AFSCME), American Federation of Teachers, Center for Biological Diversity, Center for Justice & Democracy, Center for Progressive Reform, Clean Water Action, Earthjustice, Environmental Defense Fund, Environmental Law & Policy Center, Environmental Working Group, Government Information Watch, Impact Fund, League of Conservation Voters, National Association of Consumer Advocates, National Consumers League, NRDC, Nuclear Information and Resource Service, Public Justice, Union of Concerned Scientists, Waterkeeper Alliance.

Ms. JACKSON LEE. Mr. Speaker, I urge my colleagues to vote against H.R. 788. Don't take that tool away. Help the American people.

Mr. Speaker, I rise today in strong opposition to H.R. 788, the Stop Settlement Slush Funds Act of 2023.

This bill would undermine our ability to hold corporate wrongdoers accountable for unlawful conduct.

H.R. 788, which otherwise could be called the ``Corporate Unaccountability Act,'' is another unconscionable attempt by some extreme members on the other side of the aisle to protect corporate wrongdoers at the expense of their victims and a continuation of this majority's dangerous quest to prevent federal agencies from enforcing key protections.

H.R. 788 is yet another in a series of harmful bills that pose a direct threat to a broad range of critical protections Americans rely on in their daily lives by making it harder for federal agencies to implement, execute and enforce the laws passed by Congress.

These bills are part of the extreme MAGA Republican agenda, which seeks to render the federal government ineffective by any means necessary.

First, they proposed defunding and abolishing agencies that do not suit their radical views.

Then, they broadened their scope and put forward their Default on America Act, and later their extreme CR, which would have massively underfunded the federal government, hurting its ability to address our nation's most important priorities.

This week, the sabotage continues with legislation that puts corporate interests over communities by making it harder for agencies to hold corporations accountable for unlawful conduct and depriving victims of meaningful relief.

H.R. 788 would prohibit federal agencies from entering or enforcing legal settlement agreements that include payments to third parties in cases of corporate misconduct.

These third-party payments are important when the conduct at issue results in generalized harm, such as violations of public health, environmental or consumer protections.

Recipients are often nonprofit, educational and community-based organizations.

For example, the Department of Justice has reached settlement agreements in connection with the mortgage lending practices of major banks that required payments to legal aid organizations, community development financial institutions and housing counseling groups.

Eliminating this practice, as H.R. 788 threatens to do, would materially weaken the federal government's ability to hold bad actors accountable for their unlawful conduct in a way that effectively addresses the societal injuries they have caused.

This extreme and misguided legislation has earned opposition from both the Biden Administration and a broad coalition of groups, has zero Democratic cosponsors and only advanced out of the House Judiciary Committee by a party-line vote.

According to President Biden's Statement of Administration Policy, H.R. 788 is unnecessary and ``would have adverse effects on the Federal government's ability to enforce key laws protecting the public, including criminal, bankruptcy, environmental and civil rights laws such as the Fair Housing Act and the Servicemembers' Civil Relief Act.''

It should also be noted that the following groups who have come out in opposition of this irresponsible and dangerous bill:

American Association for Justice; American Federation of State, County and Municipal Employees; American Federation of Teachers; Center for Biological Diversity; Center for Justice & Democracy; Center for Progressive Reform; Clean Water Action; Coalition for Sensible Safeguards; Earthjustice; Environmental Defense Fund; Environmental Law & Policy Center; Environmental Working Group; Government Information Watch; Impact Fund; League of Conservation Voters; National Association of Consumer Advocates; National Consumers League; NRDC; Nuclear Information and Resource Service; Public Justice; Union of Concerned Scientists; and Waterkeeper Alliance.

Let me also highlight the fact that the Administration strongly opposes the House passage of H.R. 788, the Stop Settlement Slush Funds Act of 2023, because the legislation is unnecessary and would harm the public interest.

H.R. 788 would prohibit the Federal government from entering into settlement agreements that include payments directed to appropriate parties.

This legislation seeks to address a problem that does not exist--the Federal government does not create or use ``slush funds.''

When the Federal government settles a case with those who violate the law, it seeks to hold bad actors accountable, to appropriately remedy the harm they have caused, and to prevent the recurrence of those harms.

H.R. 788 would have adverse effects on the Federal government's ability to enforce key laws protecting the public, including criminal, bankruptcy, environmental, and civil rights laws such as the Fair Housing Act and the Servicemembers' Civil Relief Act.

This bill would needlessly prohibit a widely respected and effective enforcement tool.

Specifically, it would block many agencies from including certain terms providing for payment to third parties in settlement agreements to which the United States is a party.

In the past, agencies have sometimes opted to work with entities that have violated regulatory requirements to agree to alternative forms of remediation.

These efforts have resulted in settlement agreements that include payments by those entities to third parties to advance programs that assist with recovery, benefits, or relief for communities harmed by the wrongdoing addressed in the enforcement action.

In this way, H.R. 788 would thwart federal enforcement officials' ability to negotiate appropriate relief for harm caused to the public by parties that are the subject of the enforcement action.

The criticisms of third-party settlements are misplaced: they do not unduly undermine congressional appropriation power, and they must satisfy basic requirements to be used.

The Congressional Research Service has found settlement payments to non-federal actors are permissible remedies to the extent they bear a nexus to the prosecutorial objectives of the agency.

Moreover, developing guidelines on appropriate scope, purpose, and use of third-party payments appropriately lie with the executing agency, which has the benefit of expertise and experience.

In sum, this bill is counterproductive and would undermine law enforcement goals by reducing the availability of effective remedies to address injuries to individuals and communities caused by illegal conduct. We therefore urge you to oppose H.R. 788, the Stop Settlement Slush Funds Act of 2023.

My Republican friends seem to be under a misconception about the bill. They keep saying that it unconstitutionally removes money from the Treasury without appropriation. It does no such thing. It removes not a dime from the Treasury. None of this money is the government's money to start with.

The government sues some group or company for malefaction, for damaging people. A settlement is reached. Under the terms of that settlement, the bulk of the money goes to the Treasury, and there it stays. A small proportion of that money goes to an organization that attempts to make somewhat whole the victims of the corporate malfeasance that caused the lawsuit in the first place, but no money is removed from the Treasury. On the contrary, money is placed into the Treasury, money from the corporate malefactor. Some money from the corporate malefactor, a small proportion, goes to an organization that tries to help make not whole but a little better the victims of the malefaction by the corporation in the first place.

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Mr. NADLER. Mr. Speaker, I have no further speakers, and I reserve the balance of my time.

I reiterate that H.R. 788 is a solution in search of a problem that if enacted would seriously hamstring the ability of Federal agencies to hold corporate wrongdoers accountable to the American public.

Given its potentially broad impact, H.R. 788 is opposed by a wide range of environmental, civil justice, labor, and consumer advocacy groups, including the American Federation of State, County, and Municipal Employees, the American Federation of Teachers, Earthjustice, the Environmental Defense Fund, the League of Conservation Voters, the American Association for Justice, the National Association of Consumer Advocates, and the National Consumers League.

If the underlying practice, as my friends on the other side of the aisle say, were really such a gift to corporations, why has the Chamber of Commerce come out in favor of this bill?

Mr. Speaker, I urge my colleagues to vote ``no'' on H.R. 788, and I yield back the balance of my time.

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Mr. NADLER. Mr. Speaker, I claim the time in opposition, though I am not opposed.

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Mr. NADLER. Mr. Speaker, I will not take 5 minutes.

Mr. Speaker, for all the reasons I have stated here, this is a terrible bill. This amendment makes it no worse. Therefore, I don't oppose it.

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