Attorney General Jeff Sessions announced a new policy on Wednesday that prohibits payouts to third parties in settlements reached by the Justice Department.
The announcement came in a memorandum to all U.S. attorneys and Justice Department leaders.
For decades, through a variety of initiatives, the DOJ has insisted on donations to third parties as part of the settlements it reaches with defendants, especially corporations. In the Obama administration, this practice took on the character of a “slush fund,” which funneled hundreds of millions of dollars from these corporate defendants and put it into the hands of non-government organizations.
Recipients have included left-wing “community organizer” groups such as the National Council of La Raza, or “The Race,” a Latino racial advocacy group that supports mass illegal immigration. Other recipients include the National Urban League, the National Community Reinvestment Coalition, and NeighborWorks America, which is a congressionally chartered mortgage aid group that itself has come under widespread criticism.
As Breitbart News has reported, this practice requires no direct authorization by Congress.
Begun in the 1970s with the Community Reinvestment Act, the practice of requiring banks and financial institutions to fund “community organizations” in settlements to offset supposed wrongdoing exploded in the aftermath of the 2008 financial crisis. The Obama-era Department of Justice came to massive settlements with big banks over a multitude of alleged unfair lending practices. Part of the Obama DOJ’s remedy was for millions of dollars to be transferred to these often left-wing groups that, among other things, provide mortgage assistance. This policy was the subject of a scathing 2016 report by the independent Government Accountability Institute.
According to Heritage Foundation legal scholar Paul Larkin, the practice may even be illegal for reasons including that “it allows the Justice Department to pick and choose among organizations that should receive federal funds without any guidance from Congress or any oversight by the Judiciary or Appropriations Committees in either chamber.”
Wednesday’s memo categorically puts an end to the practice, regardless of its validity under the law.
“Effective immediately,” Sessions wrote, “Department attorneys may not enter into any agreement on behalf of the United States in settlement of federal claims or charges … that directs or provides for a payment or loan to any non-governmental person or entity that is not a party to the dispute.”
According to the memo, the U.S. Attorneys’ Manual will be updated to reflect this change in policy. It also explains that this does not apply in certain instances unrelated to the practices described above.
Tom Fitton, president of Judicial Watch, a conservative public interest law firm that has been deeply involved in the fight against this slush fund, applauded the move. “The Justice Department should be in the business of upholding the rule of law, not misusing its powers to extort monies for favored interest groups,” he told Breitbart News.