From the Government Litigation and the Need for Reform / House Judiciary GOP hearing yesterday at https://www.youtube.com/watch?v=joMLIu7bUEE
Mr Johnson LA
0:08
So I'm going to start with you on the topic of settlement slush funds.
Mr Johnson LA
0:08
So I'm going to start with you on the topic of settlement slush funds.
So article one of the constitution gives Congress the power of the purse, not the executive branch.
As you said, this should be well understood by everybody.
My understanding is that the typical policy for settlement agreements with the federal government is to deposit those funds into the Treasury or distribute them to victims of the alleged action by a defendant.
However, as has been noted here under the Obama administration, the federal government began the practice of diverting the settlement funds to politically favored third party entities or programs that the administration supported all while avoiding congressional oversight.
The Trump administration rightfully did away with that practice.
But within his first handful of months on the job, Attorney General Merrick Garland revived the use of settlement slush funds presumably to reward politically expedient groups. So Mr Shu, with that context in mind, can you provide us any specific examples of the, of the federal government using these settlement slush funds in contravention of article one authorities.
Mr Shu
The probably the most egregious was the mortgage fraud settlements with the bulge bracket banks.JP Morgan Chase Bank of America City, et cetera. But Mr Chairman, I would respectfully disagree with you on the issue that began with the Obama administration. As a matter of fact, under President Carter, the, his justice department had written a memo that stating that, you know, that these third party payments were not proper. And as I mentioned before, even under a Republican administration, the Bush administration 43 when Chris Christie was a US attorney, he engaged in this reprehensible behavior. So, and in fact, you mentioned General Garland rescinding General Sessions order. And that's especially interesting because if it wasn't a big deal a as some people say, then why would he have to rescind it? He rescinded it because it was an important function for them, an important funder of their allied groups and make no mistake, they go to allied groups, whether it was Chris Christie or whether it was Tony West, it's going to allied groups. And I would add that in general Garland's recession memo, he actually in my view misstates the law.
2:33
He had cited an OLC memo from 2020 and which in turn cited an OLC memo regarding the settlement in the Canadian softwood lumber case and the reason that's important is because number one, the 2020 memo to General Barr, it was merely a form and legality memo about the CFR, it was not analyzing whether the miscellaneous receipts Act actually requires prohibiting a third party settlement. So that's, that was sort of a misuse of that particular memo, the Canadian softwood lumber settlement. Again, I believe General Garland misapplied that case. And the reason is because in that case, the United States was the defendant, the United States was not the plaintiff.
Mr Johnson LA
4:51
I gotta go back to Mr Shu because I had some more questions. So I, I, I mentioned a moment ago that I, I started tracking this during the Obama administration, but as you noted, it goes back at least to the Carter administration. So, that was a little before my time. But what is your best guess? Let me say this one study that I looked at said that only 1.4% of all settlement slush fund payments can be tracked. So that means 98.6% of the 668 million.
Chris Christie came up a lot yesterday.