close X

Search Results for: IRS

Documents Reveal Special Interest Groups Lobbied HUD for Mortgage Settlement Funds

August 8, 2017 by

Groups committed to “revolutionary social change” sent proposals, met with high-level HUD officials

The Obama-era appears to have been a flush time for a number of favored special interest groups seeking hand-outs. It now appears that the previous administration’s pattern and practice of circumventing the congressional appropriations process to funnel money to third-party groups may have been more widespread than we thought. Beginning in 2013, the federal government entered into a number of settlements with major banks to resolve claims related to the issuance of residential-mortgage-backed securities. These settlements included billions of dollars in “consumer relief” payments that should have gone to the alleged victims, but instead were funneled to third-party organizations, including to those favored by the Obama administration.

CoA Institute has been investigating these settlements for several years and has recently uncovered documents indicating that some of these third-party organizations were directly lobbying high-level Housing and Urban Development (“HUD”) officials for a piece of the settlement pie. These documents are consistent with prior records discovered by the House Judiciary Committee regarding similar lobbying of Department of Justice (“DOJ”) officials.

In May of 2015, the House Judiciary Committee wrote a letter to the DOJ requesting information and documents relevant to the residential-mortgage-backed securities settlements.  The information they received suggested that some third-party organizations were advocating for provisions that included mandatory donation requirements from which they would benefit.

One of the communications the House Judiciary Committee received was an email sent on November 8th, 2013 from the Leadership Conference on Civil and Human Rights (LCCHR) to the DOJ.  In the email, LCCHR urged the DOJ to include funds in the JP Morgan settlement promoting community restoration and specifically seeking investment in Virginians Organized for Interfaith Community Engagement (VOICE) and their Metro Industrial Areas Foundation (Metro-IAF) affiliates. The DOJ also provided the House Judiciary Committee with an email from VOICE leadership to the head of legislative affairs at the DOJ.  VOICE asked to set-up a meeting to make the argument that grants to community equity restoration funds be mandatory in all future settlements.

Commentators have noted that groups like VOICE and their IAF affiliates have “a commitment to what [they] call ‘revolutionary social change’” promoted through their own training institutes. One “objective of the training is to help leaders see the connection between their local issues and the broader national IAF objectives and associated progressive causes.”

CoA Institute recently received documents from HUD that are similar to those that the House Judiciary Committee received from the DOJ two years ago.  CoA Institute filed a FOIA request for information on HUD’s involvement in the mortgage settlements.  After filing a complaint against HUD for failing to disclose its role in the mortgage settlements, COA received documents including the segments below from HUD. The HUD documents reveal communications between HUD and VOICE, the same organization that had been lobbying the DOJ to receive settlement funds.

For instance, the following is an email between senior policy advisor Michelle Maiwurm, then working for Sen. Mark Warner (D-VA), and Damon Smith, then Principal Deputy General Counsel at HUD, discussing opportunities for third parties, such as VOICE, to submit proposals for the settlement agreement.

The lead organizer at VOICE, Martin Trimble, responds to a meeting with HUD officials Lelaine Bigelow and Damon Smith earlier that day and attaches the fund proposal.

 

Here are the relevant portions from VOICE’s proposal for the VOICE/Metro IAF National Community Equity Restoration Fund mentioned in the previous email correspondence.

The parallel evidence discovered from documents submitted to the House Judiciary Committee and those provided to CoA Institute helps explain why Attorney General Jeff Sessions recently prohibited DOJ from entering into settlement agreements that provide for payments to non-governmental, third-party organizations that are not parties to the dispute. In order to ensure this problem won’t reoccur in a future administration or with other agencies, however, Congress should pass the Stop Settlement Slush Funds Act of 2017. This bill would prevent all agencies, not just DOJ, from entering into these slush-fund agreements, would remove agencies’ ability to divert funds to politically-aligned third-parties and would allow them to be disbursed to actual victims of the alleged violations or deposited in the Treasury, as required by law.

Josh Schopf is Counsel and Cara Brown is Law Clerk at Cause of Action Institute, a Washington, D.C. non-profit oversight group advocating for economic freedom and individual opportunity.

 

 

 

Filed Under: Media, Blog Tagged With: , , , , , ,

It’s Time to End Ex-Im Bank’s Taxpayer Subsidized Corporate Welfare

August 2, 2017 by

When the federal government subsidizes a private company, we all lose. Such subsidies, often referred to as “corporate welfare” by critics, tend to benefit big companies, while stifling innovation and making it more difficult for smaller companies to compete. The Export-Import Bank, or Ex-Im Bank, is perhaps the highest profile example of this process.

The Ex-Im Bank claims to facilitate exports of U.S. goods and support American jobs. To do this, the Bank finances American businesses—freeing them from the need to obtain private loans—so that they can compete internationally. This may sound good in the abstract but its implementation imports all the hazards of corporate welfare.

In April, President Trump disappointed supporters of free trade when he seemingly changed his position on the Ex-Im Bank. As a candidate in 2015, Trump said the Ex-Im Bank was “unnecessary” and contradictory to free enterprise. However, three months after his inauguration, he called the Bank “a very good thing” claiming that “it actually makes money.” In his first budget proposal, President Trump decided to keep it. He also intends to nominate two board members, which will permit the bank to enter into full operation, meaning more and bigger loans from the taxpayer.

On the bright side, President Trump has nominated former Rep. Scott Garrett to head the Bank. In the past, Garrett has been an outspoken critic of the Ex-Im Bank, which hopefully means that should he be confirmed, he will limit its operations and advocate for reform. It can only be seen as a positive sign that the big businesses who benefit most have already come out in opposition to his nomination.

The Ex-Im Bank claims to “level the playing field” for domestic products and help small businesses compete internationally. But federal subsidies to politically-favored companies hurt both international competition and market efficiency. If a business can’t get a private loan, resources should be allocated elsewhere to companies that can better compete, without taxpayer-subsidized assistance. Artificially propping up private industry is not the role of the federal government.

Many economists recognize the failures of the Ex-Im Bank. But supporters, most prominently the companies that get these cheap loans, argue it is acceptable to sacrifice quality, efficiency and competition to help prop up American jobs. However, the biggest recipients are generally in good positions to sustain themselves and do not need these funds to retain American jobs.

Most beneficiaries of the Ex-Im Bank’s loans are, in fact, not small businesses. The largest recipient, by far, is Boeing, which takes a whopping 40 percent the Bank’s financing.  The top 10 recipients, which include Caterpillar, General Electric, and other behemoth companies (and which frighteningly includes “unknown”), makes up 75 percent of the Bank’s expenditures.

Boeing has repeatedly threatened job losses if the Bank goes away. In 2015, the company cautioned that ending the Ex-Im Bank would lead to the loss of thousands of employees because otherwise it would be unable to compete with the European company, Airbus. Congress gave in and re-instated the Bank—and Boeing went ahead and cut 4,000 jobs anyway. Re-instatement of the Bank did nothing to save those jobs, but it did line the pockets of shareholders (18 of which are members of Congress). Companies like Boeing don’t need subsidized loans to stay afloat. Faced with the possibility of the Ex-Im Bank closing, for example, the government and Standard & Poor released reports that found Boeing would do fine without the aid. The other largest recipients are similarly financially sound.

Free and open trade breeds competition and efficiency, whereas corporate subsidies set up a system of reliance, barriers to entry and inefficiency. If you’re playing with the house’s money, you’re much more likely to chase the river and make poor decisions. For example, in 1987, the Ex-Im Bank’s investments were so bad that it requested a massive federal bailout. After the loss of hundreds of millions of dollars, it needed a $3-billion bailout just to stay afloat. The bank had some gains and some losses in the 1990s. Although there was an overall profit of $5 billion since 1990, the low interest rates brought in much less money than it could have and defaults may result in a net loss in the future.

A federal budget agency found that the Ex-Im Bank’s current budget is on pace to cost taxpayers $2 billion over the next decade. Yet we continue to throw more and more taxpayer money at an unnecessary corporate welfare regime, benefitting not the free market but favored players.

Federal policies should create an even playing field for industry and a friendly environment for entrepreneurship to flourish. Only about two percent of all exports are subsidized by the Ex-Im Bank. If 98 percent of the market can export without needing any help from a corporatist bank, the other two percent should manage fine. The Bank helps line the pockets of politically-connected businessmen and gives little aid to the average person. It is time for the president and Congress to end it for good.

Tyler Arnold is a communications associate at Cause of Action Institute

Filed Under: Media, Blog Tagged With: , , , , , ,

Senator Grassley Claims the Trump Administration is Rejecting the DOJ’s Opinion on Responding to Congressional Records Requests

July 31, 2017 by

At the end of last week, Senator Chuck Grassley’s office published a press release that claimed the White House “has committed to voluntarily answer all congressional inquiries, not just those from committee chairmen.” The White House’s response has seemingly resolved the Judiciary Committee Chairman’s concern that the Administration had wedded itself to what Senator Grassley described as a “nonsense” legal opinion issued by the Department of Justice’s Office of Legal Counsel (“OLC”).

Cause of Action Institute (“CoA Institute”) previously reported on the OLC opinion, arguing that the Trump Administration may be charting a course into newer and less transparent waters. The opinion was technically correct in emphasizing that individual Members of Congress lacked constitutional authority to conduct formal, compulsory oversight.  But the OLC also provided a distorted view of the law by implying that federal agencies could ignore requests, or provide limited responses on a discretionary basis, simply because of a Member’s political affiliation or position in leadership.

In response to a rebuke from Senator Grassley, who requested that the White House rescind the OLC opinion, White House Director of Legislative Affairs Marc Short clarified that the opinion did not, in fact, “set forth Administration policy,” but only “legal advice consistent with the research of the Congressional Research Service.” Mr. Short further indicated that “[t]he Administration’s policy is to respect the rights of all individual Members, regardless of party affiliation,” and to “use its best efforts to be as timely and responsive as possible . . . consistent with the need to prioritize requests from congressional Committees, with applicable resource constraints, and with any legitimate confidentiality or other institutional interest of the Executive Branch.”  Steven Engel, the Administration’s current nominee for head of OLC, has promised to revisit and clarify aspects of the OLC opinion.

Whether the White House’s response to Senator Grassley is a “commitment of cooperation” is yet to be seen. The Administration’s actual policy for responding to congressional inquiries is unclear, as CoA Institute’s ongoing efforts to investigate the General Services Administration demonstrate. Mr. Short’s letter and Mr. Engel’s confirmation hearing promises leave enough doubt as to the exact contours of the President’s transparency agenda.  The fact remains that Executive Branch officials have publicly acknowledged a “new policy,” which appears consistent with the OLC opinion.  Until more details about that policy emerge, it will be hard to evaluate whether, or to what extent, the White House has reversed course.

Ryan P. Mulvey is Counsel at Cause of Action Institute

Filed Under: Media, Blog Tagged With: , , , , ,

CoA Institute Urges Court to Reveal Evidence Regarding the FBI Clinton Email Investigation

July 31, 2017 by

Journalist files declaration supporting public interest in release of FBI declaration

Washington D.C. – Cause of Action Institute (“CoA Institute”) has made a filing in support of its motion with the U.S. District Court for the District of Columbia, urging the judge to disclose the full contents of a redacted FBI declaration that was filed so that only the judge can review the entire statement.

The government characterized the declaration as containing new, undisclosed details about the scope of the FBI’s investigation into Hillary Clinton’s email practices as Secretary of State. Specifically, the government said the declaration includes “additional details about the grand jury process . . . as well as about other sealed proceedings” and was submitted to provide “further details of the subpoenas to establish to the Court’s satisfaction the thoroughness of the inquiries made in this regard.” As a result of this litigation, the government revealed for the first time early this summer that the FBI issued grand jury subpoenas in its criminal investigation into Clinton’s email practices.

Cause of Action Institute President and CEO John J. Vecchione: “The FBI’s revelation that grand jury subpoenas were issued during its investigation of Secretary Clinton’s emails revealed a criminal component. Details of these subpoenas could be critical to our case to recover those emails. Unfortunately, the government has taken a step back behind the curtain and submitted a supplemental declaration, in camera and ex parte, meaning only the judge and the government’s lawyers are allowed to see it. We can only surmise the declaration shows that the FBI issued subpoenas to the service providers in search of Ms. Clinton’s BlackBerry emails. Without access to the un-redacted declaration, we cannot know the scope of those subpoenas, nor will we be able to contest the relevance of new facts.

“The public interest in learning the extent of the government efforts to recover unlawfully removed records and basic notions of fair play outweigh the need to protect grand-jury secrecy, the existence of which the government has already revealed.  The government should not be permitted to use the grand jury information as a sword and also shield it from public view. Anglo American law frowns on litigation through secret filings. Accordingly, the Court should require the government to open the curtain, so we can properly respond to the new evidence.”

Matthew Continetti, editor in chief of the Washington Free Beacon, an independent news publication based in Arlington, Virginia, submitted a declaration urging full public disclosure of the government’s filing.  As Mr. Continetti explained:

This matter is one of intense public interest given Secretary Clinton’s nomination in 2016 by the Democratic Party for the presidency of the United States, high-profile positions in government, and continued involvement in public life…

It is essential for the public to understand the full scope and breadth of the FBI’s investigation into Secretary Clinton’s email server for the public to make an informed decision about what transpired during Secretary Clinton’s service to the State Department.  I believe the information sought by Plaintiffs would be of significant public interest and of interest to the readers of the Washington Free Beacon.

The Plaintiffs’ reply in support of its motion is available here.

Mr. Continetti’s declaration in support of the Plaintiffs’ motion is available here.

For information regarding this press release, please contact Zachary Kurz, Director of Communications: zachary.kurz@causeofaction.org

 

Filed Under: Media, Press Release Tagged With: , , ,

The GSA Has No Records on its New Policy for Congressional Oversight Requests

July 26, 2017 by

Last month, Cause of Action Institute (“CoA Institute”) detailed how it intended to investigate rumors of the Trump Administration directing federal agencies to ignore “oversight requests” from Democratic legislators.  Reports of the “new policy” sent the transparency community into a frenzy, particularly as they came on the heels of an opinion letter from the Department of Justice’s Office of Legal Counsel that corroborated much of the scuttlebutt. As part of its investigation, CoA Institute sent a FOIA request to the General Services Administration (“GSA”) seeking access to various records concerning the agency’s policies or procedures for handling congressional oversight requests, congressional requests for information, and congressional requests from individual Members for the disclosure of agency documents.  We also requested copies of records evidencing any White House directives on pre-production consultation or review of requests from Congress or under the FOIA.

Last week, the GSA provided its final response.  The response leaves much to be desired, as the agency released only two documents.  The first is a February 20, 2015 order regarding congressional and intergovernmental inquiries; the second is a previously-secret April 15, 2009 White House memo that CoA Institute first made publicly known in June 2013.  The GSA did not find (or at least did not produce) anything pertaining to the Trump Administration’s new policy to respond only to Republican congressional leadership.

The General Services Administration’s failure to locate relevant records is curious because its acting administrator, Timothy Horne, previously testified before Congress that “the [Trump] Administration has instituted a new policy that matters of oversight need to be requested by the Committee chair.”  Admittedly, he clarified that the White House itself hadn’t distributed a finalized, written version of its policy, but it stands to reason that the GSA would still have some record of its effort to formalize whatever oral directions were issued by the White House.  Similarly, to the extent the GSA may now be processing any congressional disclosure requests under the FOIA, the agency should have records concerning those policies and procedures.  None were given to CoA Institute.

We have filed an appeal challenging the adequacy of the General Services Administration’s search efforts.  And we are still waiting for the Office of Personnel Management to respond to a similar request.  In the meantime, CoA Institute remains committed to holding the Executive Branch accountable to one of the most important principles of good government: transparency.

Ryan Mulvey is Counsel at Cause of Action Institute.

Filed Under: Media, Blog Tagged With: , , ,

CoAI Sues for Records of House Committee Chair’s Urging FOIA Obstruction

July 18, 2017 by

Records could shed light on DOJ’s communications with Chairman Hensarling, reveal guidance to agencies

Washington D.C. – Cause of Action Institute (“CoA Institute”) today filed a lawsuit against the Department of Justice (“DOJ”) for records that could reveal whether the agency’s Office of Information Policy or Office of Legislative Affairs was involved with a controversial, and legally dubious, directive from the House Committee on Financial Services concerning the processing of records under the Freedom of Information Act (“FOIA”).  The suit also seeks records of related communications between DOJ and twelve federal agencies under the Committee’s jurisdiction.

In May 2017, CoA Institute filed a FOIA request with the DOJ in response to reports that Rep. Jeb Hensarling (R-Texas), Chairman of the House Committee on Financial Services, directed the Department of the Treasury and eleven other agencies to treat all records exchanged with the Committee as “congressional records” not subject to the FOIA.

CoA Institute Counsel Ryan Mulvey: “Through its Office of Information Policy, the DOJ is responsible for overseeing government-wide compliance with the FOIA.  The DOJ likely would have been consulted by agencies that received Chairman Hensarling’s letter, as well as by the Committee itself when it was considering the directive.  The public deserves to know how and to what extent DOJ FOIA experts have been involved in formulating and implementing this new anti-transparency policy.’”

Because Congress is not subject to the FOIA, a request for records that have been exchanged with the legislative branch can present unique difficulties for an agency.  The law and well-established court precedents require that Congress manifest a clear intent to maintain control over specific records to keep them out of reach of the FOIA.  Chairman Hensarling’s directive is ineffective in this respect.  The mere fact that an agency possesses a record that relates to Congress, was created by Congress, or was transmitted to Congress, does not, by itself, render it a “congressional record.”  Any deviation from the acknowledged standard for defining a “congressional record” would frustrate the FOIA and impede transparent government.

CoA Institute’s complaint is available here.

For information regarding this press release, please contact Zachary Kurz, Director of Communications: zachary.kurz@causeofaction.org

Filed Under: Media, Press Release Tagged With: , , , ,

CoAI Seeks Supreme Court Review of Job-Killing Fishing Regulation

July 13, 2017 by

High Court may be last hope to halt regulation that will put 60 percent of New England ground fishermen out of business

Washington, D.C. – Cause of Action Institute (“CoA Institute”) has filed a petition for writ of certiorari urging the U.S. Supreme Court to review the legal arguments of our clients, groundfisherman David Goethel and a group of Northeast fishermen, who sued the U.S. Department of Commerce after the agency shifted the costs for at-sea monitors onto industry. At more than $700 per day at sea, these costs are more than double what many small-boat fishermen take home from an average day of fishing.

Both the U.S. District Court for New Hampshire and the First Circuit Court of Appeals dismissed the case, ruling that the fishermen’s suit was untimely based on when the rule was first disseminated, even though the regulatory costs were not shifted to industry until several years later.

CoA Institute Vice President Julie Smith: “Our clients deserve an opportunity to be heard on the merits. Fishermen who have done nothing wrong should not be put out of business by an unlawful regulation.”

The petition states:

“The First Circuit, in defiance of this Court’s precedents, refused to reach the merits of the fishermen’s challenge, holding that even though the fishermen would certainly face enforcement action for failure to comply with the Government’s unlawful monitoring requirement, they missed any opportunity to seek preenforcement review of that regulation. By requiring Petitioners to, quite literally, ‘bet the boat,’ the First Circuit has committed clear error in ignoring this Court’s precedents on pre-enforcement review…

“Here, the Government waited five years before deciding to implement the industry-funding requirement for the groundfish At-Sea Monitoring Program. Petitioners promptly filed suit, but, so far, have been denied a decision on the merits of their case. This Court should grant review to settle these . . . important questions of law and vindicate its own precedents, which will give the New England fishing industry a second chance at life.”

David Goethel: “After 30 years of fishing, I can’t afford to fish any longer if I’m forced to pay for at-sea monitors. These regulatory costs will devastate small boat fishermen like myself. The Supreme Court may be our last hope to save an industry that for centuries has provided a living for fishermen in New England.”

Northeast Fishery Sector 13 Manager John Haran: “The fishermen in my sector can’t sustain this industry funding requirement and many will be put out of business if this mandate remains in place. The livelihoods of generations of proud fishermen in New England are at stake.”

Case Background:

In November 2015, the Department of Commerce finally announced the date by which sector fishermen, who fish for cod, flounder and certain other ground fish, must not only carry third-party contractors known as “at-sea monitors” on their vessels during fishing trips, but also pay out-of-pocket for the cost of those monitors.  CoA Institute’s clients filed suit to challenge this “industry funding” requirement, which will devastate the Northeast fishing industry, at the price of many jobs and family livelihoods.

In July 2016, the U.S. District Court for the District of New Hampshire dismissed the lawsuit. CoA Institute appealed the decision and in April 2017, the First Circuit Court of Appeals upheld the District Court’s ruling, but without addressing the merits of the case. The Circuit Court held that the fishermen’s suit was untimely, and must have been filed within thirty days of the original agency rule that mandated industry-funding, despite the fact that the requirement never enforced for nearly half a decade.  Interestingly, while the First Circuit did not address the merits of the case, it did emphasize the devastating economic impacts of the regulation and, in a rare move, urged congressional action to clarify the law regarding who should pay for the at-sea monitors.

To learn more, visit the Cause of Action Institute website.

For information regarding this press release, please contact Zachary Kurz, Director of Communications: zachary.kurz@causeofaction.org

Filed Under: Press Release, Media Tagged With: , , , , , ,