Update on Corrupt Feedback Loops: Justice Dept. Extortion

ACORN Activists

ACORN Activists

Earlier work by Kim Strassel, Overlawyered, and my own post (Corrupt Feedback Loops: Justice Dept. Extortion) looked at how the Justice Department extorted donations to groups favoring the Democratic Party and left-wing activism, effectively diverting to political supporters money that should have been returned to the supposed victims of mortgage banks.

The Volokh Conspiracy blog at WaPo has an entry by Nicholas Quinn Rosenkranz today about his testimony on a new bill to block this corrupt practice:

The Justice Department has celebrated its settlements with major banks for their conduct leading up to the subprime mortgage crisis… Investor’s Business Daily has characterized these payments as “political payoffs to Obama constituency groups,” and Congress is now considering banning this practice with the Stop Settlement Slush Funds Act of 2016.

In addition to the obvious potential for cronyism and corruption, this practice also implicates a constitutional question. The Constitution provides: “No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” If the banks had paid this money to the United States — which is, after all, the plaintiff in these cases — then the money would have gone into the Treasury. And if, subsequently, the president or the attorney general favored using this money to subsidize these “community development” organizations, they would have had to request an appropriation from Congress; doling out such money “without an appropriation… violates the Constitution,” as the president was reminded just last week. By providing for payments directly from the banks to the organizations, these settlement provisions circumvent the Appropriations Clause and cut Congress out of the loop.

On Thursday, I testified before the Oversight and Investigations Subcommittee of the House Financial Services Committee on this issue, and I supported legislation along the lines of the Stop Settlement Slush Funds Act of 2016. My written statement is available here…. Video of the hearing and all written statements are available here.

There’s more in the Daily Caller’s story, “Feds Divert MILLIONS To ‘Slush Fund’ That Fuels These Liberal Activist Groups” by Richard Pollock:

Rep. Sean Duffy, a Wisconsin Republican and chairman of the House Financial Services oversight and investigations subcommittee, said Friday the officials “skimmed” off three percent from mortgage-related bank settlements. This created what he called a $500 million “slush fund” that could be steered toward favored groups.

“The first objective of a settlement is to make sure that we have victims who are made whole,” Duffy said, referring to millions of Americans who lost their homes during the meltdown that led to the Great Recession of 2009. “If you’re diverting money away from victims and sending it to third-party activist groups, you have victims who are being harmed not just once, but a second time.”

Justice officials were long able to “skim 3 percent of any settlement money into their own account to for the most part spend it the way they see fit,” Duffy told participants in the media briefing hosted by the Cause of Action Institute, a nonprofit legal watchdog group.

Stay tuned. Recognizing how public money is diverted to to fund armies of activists to tear down our established institutions is only the start of reform; digging through every agency to root out employees and funds used to “educate” and mold the voters to support the administrative state will be a long and difficult struggle.

More reading on other topics:

Jane Jacobs’ Monstrous Hybrids: Guardians vs Commerce
The Great Progressive Stagnation vs. Dynamism
Death by HR: How Affirmative Action is Crippling America
Death by HR: The End of Merit in Civil Service
Corrupt Feedback Loops: Public Employee Unions
Death by HR: History and Practice of Affirmative Action and the EEOC
Civil Service: Woodrow Wilson’s Progressive Dream
Bootleggers and Baptists
Corrupt Feedback Loops: Justice Dept. Extortion
Corrupt Feedback Loops, Goldman Sachs: More Justice Dept. Extortion
Death by HR: The Birth and Evolution of the HR Department
Death by HR: The Simple Model of Project Labor
Levellers and Redistributionists: The Feudal Underpinnings of Socialism
Sons of Liberty vs. National Front
Trump World: Looking Backward
Minimum Wage: The Parable of the Ladder
Selective Outrage
Culture Wars: Co-Existence Through Limited Government
Social Justice Warriors, Jihadists, and Neo-Nazis: Constructed Identities
Tuitions Inflated, Product Degraded, Student Debts Unsustainable
The Morality of Glamour

On Affirmative Action and Social Policy:

Affirmative Action: Chinese, Indian-Origin Citizens in Malaysia Oppressed
Affirmative Action: Caste Reservation in India
Diversity Hires: Pressure on High Tech<a
Title IX Totalitarianism is Gender-Neutral
Public Schools in Poor Districts: For Control Not Education
Real-Life “Hunger Games”: Soft Oppression Destroys the Poor
The Social Decay of Black Neighborhoods (And Yours!)
Child Welfare Ideas: Every Child Gets a Government Guardian!
“Income Inequality” Propaganda is Just Disguised Materialism

The greatest hits from SubstrateWars.com (Science Fiction topics):

Fear is the Mindkiller
Mirror Neurons and Irene Gallo
YA Dystopias vs Heinlein et al: Social Justice Warriors Strike Again
Selective Outrage
Sons of Liberty vs. National Front
“Tomorrowland”: Tragic Misfire
The Death of “Wired”: Hugo Awards Edition
Hugos, Sad Puppies 3, and Direct Knowledge
Selective Outrage and Angry Tribes
Men of Honor vs Victim Culture
SFF, Hugos, Curating the Best
“Why Aren’t There More Women Futurists?”
Science Fiction Fandom and SJW warfare

More reading on the military:

US Military: From No Standing Armies to Permanent Global Power
US Military: The Desegration Experience
The VA Scandals: Death by Bureaucracy

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