It’s a scandal that some are comparing in scope and severity to Watergate: the Obama administration has been accused of using a Department of Justice slush fund to siphon billions of dollars into leftwing activist groups that are now working to undermine Donald Trump’s presidency.
According to findings unearthed by the House Judiciary Committee, the Obama administration exploited a loophole that allowed banks to settle lawsuits by donating their hefty payouts to third-party non-victims, distributing upwards of $3 billion in this manner to a slew of organizations with ties to grass-roots activism.
“Advocates for big government and progressive power are using the Justice Department to extort money from corporations,” said Tom Fitton of Judicial Watch, a conservative watchdog group, to Fox News. “It’s corrupt, pure and simple.”
While the Government Accountability Office and Congressional Research Service have both found that this process does not violate congressional guidelines, critics argue that the money should be paid out to the Treasury and not to this shadowy network of leftist groups. Some go as far as to suggest that the Obama administration incentivized banks to donate those funds instead of giving it directly to consumers.
“The underlying problem with the slush funds is we don’t know exactly where the money is going,” said Ted Frank, director of The Competitive Enterprise Institute Center for Class Action Fairness. “Using enforcement authority to go after corporate defendants, DOJ bureaucrats are taking billions away from taxpayers to fund their pet projects overriding congressional preferences.”
In fiscal 2016, the HUD Housing Counseling received an additional $30 million in funding from Citi and Bank of America settlements on top of the $47 million that was already allotted to it by Congress. Similarly, the Legal Services Corporation was allowed to disperse $412 million obtained from Bank of America throughout state organizations even though it had already received $385 million from Congress for the same purpose.
Sen. James Lankford (R-OK) has introduced the Stop Settlement Slush Fund Act of 2017, while House Judiciary Chairman Bob Goodlatte (R-VA) is seeking to pass a similar bill in the House.