Omnibus Omits Justice Department
‘Slush Fund’ Rider Ending Payments to Liberal Groups

Rider would have ended settlement payments from going to groups such as La Raza, National Urban League

December 17, 2015

President Obama on Wednesday backed the final spending package that would continue to fund the government through September 2016, with the White House saying it meets his expectations without containing "hundreds of needless ideological riders."

The bill was praised by the likes of Planned Parenthood and will continue to allow American funding to go toward "international climate" efforts in poorer nations. The bill would also provide handouts for NASCAR tracks, college students, teachers, and racehorses.

However, one provision that did not make the final omnibus bill would have eliminated what critics refer to as a Department of Justice "slush fund" that allows money to be funneled to third-party activist groups—a practice that has come under scrutiny due to the liberal ideological bent of some of the approved organizations.

The practice in question began on August 21, 2014 when the department entered into a nearly $17-billion settlement with Bank of America for selling residential mortgage-backed securities leading up to the 2008 financial collapse. Similar settlements were made with J.P. Morgan and Citigroup that brought the total amount to $36.65 billion.

During settlement, the companies agree to pay financial penalties that sometimes include "donations" given to nonprofits instead of being paid directly to the Treasury.

With the Bank of America and Citigroup settlement, a provision was included that required $150 million in donations to groups that are supposed to help people who have been hurt by a corporations actions. The donations count as twice as much as cash paid towards the settlement total. For example, if a company were to donate $500,000 to an approved organization, it would count as $1,000,000 toward their bill.

The approved groups to where donations can go include the likes of the National Council of La Raza, National Urban League, and NeighborWorks America, which gives grants to community organizing groups thta lean left.

In the case of Bank of America, two payments were made totaling $1.5 million to La Raza that were credited as $3,450,00 while another $1,150,000 was donated to the Urban League and counted as $2,265,000 towards their bill, according to the bank’s latest settlement report released on November 2.

"The purpose of financial penalties is to punish, and to provide restitution to real victims," the Wall Street Journal wrote on Dec. 3. "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."

Rep. Bob Goodlatte (R., Va.), the head of the Judiciary Committee, has expressed concern for some time now over these actions. The Justice Department "may be systematically subverting Congress’ budget authority by using settlements to funnel money to activist groups," Goodlatte said in February.

On June 2, the House of Representatives passed an amendment brought forth by Goodlatte to be included in the original appropriations bill that sought to end the practice.

"The passage of this amendment finally puts an end to the serious executive overreach of the Department of Justice in regards to improper donations being allocated in mortgage settlement agreements," Goodlatte said after its passage. "A long and difficult investigation led by the House Judiciary Committee shows that the [Justice Department] DOJ systematically subverted Congress’s budget authority by allocating donations to third-party groups, rather than to the victims who are deserving of settlement money."

An aide for the House Judiciary Committee informed the Free Beacon that the amendment did not make it into the final omnibus bill. The Appropriations Committee did not respond to request for comment on why it failed to make the final bill and whether anyone in particular nixed it.

Government accountability groups such as Cause of Action have launched investigations into the practice. The group has also filed a request under the Freedom of Information Act seeking "clarity from the Justice Department on its legal authority to enter into financial settlements and arbitrarily allocate settlement funds."

A senior policy adviser for Freedom Partners said the Obama administration is circumventing Congress in what equates to taxpayer funds being funneled to liberal special interests.

"The Obama administration is circumventing Congress by doling out funding from bank settlements to its left-wing allies," Andy Koenig said. "This is billions of dollars in taxpayer money that instead of going to far-left special interests, should be going toward paying down our debt. Ending shady deals like this should be commonsense."

The Justice Department did not respond to a request for comment.