He’s ordered a review of a Trump policy against settlement payouts to favored third parties.
Buried in the Biden administration’s flurry of early executive orders is a potential challenge to the core legislative function: the power to tax and spend. Under the proposal, the Justice Department may revert to using its enforcement power to force companies under investigation to give billions of dollars to outside interest groups—a common practice before June 2017. Implicitly, this amounts to a federal appropriation unauthorized by Congress.
After the 2008 financial crisis, for instance, the Obama administration’s Justice Department extracted multibillion-dollar settlement deals from major banks. These agreements directed the banks to send almost half the settlement dollars not to the Treasury or the actual victims of corporate misconduct but to “consumer relief” payments directed by administration officials. Among these payments: funding for new “affordable housing” developments, as well as gifts to government-sanctioned community-development, legal-aid and housing activist groups.
Although the Obama Justice Department was unusually aggressive in using threats to make implicit appropriations, it didn’t invent the approach. Under George W. Bush, Justice entered a deferred prosecution agreement with Bristol Myers Squibb that required the company to endow a professorship at Seton Hall University’s law school—alma mater of Chris Christie, the U.S. attorney overseeing the settlement deal. The professorship? A chair in business ethics.
James R. Copland is a senior fellow and director of legal policy at the Manhattan Institute. He is the author of “The Unelected: How an Unaccountable Elite is Governing America.” Follow him on Twitter here.
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