Even if the Accountable Capitalism Act is a terrible idea, we shouldn't blame Warren for making a serious political proposal when her colleagues don't.
In a very fine investigative article in the Washington Examiner, Sean Higgins reports on “Obama’s Big Bank Slush Fund.” As part of their “settlements” with the feds over alleged misdeeds, big banks routinely agree to make donations to various “fair housing” outfits, to the tune of several hundred millions of dollars. For reasons described in the article, these transfers reduce the advertised settlement value. Technically, settlement proceeds must be deposited in the U.S. Treasury. However, both the enforcers at DoJ and the targets are better off if they negotiate some arrangement that makes the banks pay a bit less and allows DoJ to make friends. So over the years, DoJ has cranked up a bunch of clever diversion strategies.
Bob Goodlatte, Republican Chair of the House Judiciary Committee, is looking into this. Maybe the recipients of all the largesse are doing worthwhile things, he says; but if so, Congress should appropriate the money. That would indeed be a very good idea; but it’s not going to happen. For one thing, the Warren-Sanders crowd likes to yap that big banks are “too big to jail” and are getting sweetheart deals; but if that’s what it takes to keep the Dems’ “non-profit” friends in shoes, that’s what their congressional sponsors will defend. Furthermore this is only the tip of a pretty sizeable iceberg—a vast array of slush funds through which the banks and the feds sustain the “fair housing” complex. Some of the funds are simply protection money, paid by the banks’ PR departments; others come from “settlements,” as here; still others come from programs established by Congress, such as the CFPB’s “Victims’ Fund” (officially, the Civil Penalty Fund). It’ll take some effort to drain this swamp—and who even wants to?
It’s no exaggeration to say that the advocacy “community” is simply an appendix to the government-financial complex. Come to think of it, though: that’s also true of the banks.