The public often hears about the settlements that federal investigative agencies make with offending parties, usually for x million dollars, but we are given little information on just what will happen to that money, and how it will be paid. Senator Elizabeth Warren (D-MASS), champion of the American consumer, has just spearheaded a bill, S. 1109, to fix that. Federal enforcement agencies would be required to be more transparent with their settlements, to keep the public fully informed.
“The idea behind this bill is straightforward: If the government is going to cut deals on behalf of the American people, the American people are entitled to know what kind of a deal they’re getting” says Warren. It turns out that the dollar figure for a settlement, say, $5 million dollars from A Certain Wall Street Bank might include tax credits and deductions built into it which lessens the blow and makes light of the intended punishment.
Warren pointed to a 2013 settlement with 13 mortgage servicers accused of illegal foreclosure practices. She said federal regulators claimed the settlement totaled $8.5 billion, but more than half of the settlement value — about $5.2 billion — was in the form of credits the servicers could get for agreeing to modify or forgive loans.
Warren said the public statement didn’t explain that the servicers could claim an entire credit by forgiving a portion of large unpaid loans. For example, she said, a servicer that wrote down $15,000 of a $500,000 unpaid loan balance would get a credit for $500,000, not $15,000. She said the undisclosed method of calculating credits could end up cutting the overall value of the $8.5 billion settlement by almost 60 percent.
This bill passed the Senate unanimously, which is very rare in this day and age. Given what we know about the revolving door between the Treasury Department and Wall Street, it would seem that some of the companies are getting off quite easily- being able to arrange their own punishments, a slap on the wrist and somehow being able to negotiate tax deductions into their settlements? It is extremely offensive to the American people to see the financial institutions which crippled the world’s economy and sent us into a recession not only get away with murder, but are able to arrange on what terms they’d get away with it! This bill is a strong step forward into allowing the public a glimpse into just what kind of incestuous collusion occurs in the backrooms of Wall Street and the SEC– with time, we might even get to see some real punishments.
Colin Taylor is the editor-in-chief of Occupy Democrats. He graduated from Bennington College with a Bachelor's degree in history and political science. He now focuses on advancing the cause of social justice and equality in America.