The misuse of settlement slush funds was one of the Obama Administration’s worst practices, which it used to end run Congress’s constitutional spending power. After the GOP took the House and tried to cut spending for liberal interest groups, the Obama Justice Department began to force corporate defendants to allocate a chunk of their financial penalties to those same groups.
Banks were made to fund left-wing activists such as NeighborWorks — though these groups were neither victims nor parties to lawsuits. In 2015 JP Morgan was required to pay $7.5 million to the American Bankruptcy Institute’s endowment for financial education. In 2016 Volkswagen was required to invest $2 billion in zero-emissions technology and promote zero-emissions cars. Government enforcement became an income redistribution mechanism without having to go through Congress.
Mr. Sessions’s brief memo instructs Justice’s 94 U.S. Attorneys to immediately halt the practice. It correctly notes that financial penalties are designed to punish and provide relief to victims — not to generate political payola. Save for limited exceptions — such as payments expressly authorized by statute — the memo instructs that future settlement money will go directly to victims or to the U.S. Treasury.
The mainstream media are all over that issue.