In recent years, the government has settled a number of high profile cases out of court with corporations accused of illegal activity to increase their profits. The question is: do the “punishments” the government negotiates fit the crime? Unfortunately, that’s hard to determine when Americans are not entirely sure of the punishment or the crime! As it stands, many of these dubious settlements are kept confidential.
Here comes Senator Elizabeth Warren — Congressional Patron Saint of Common Sense — to the rescue with a reform that’s so crazily reasonable it just might work. She has introduced The Truth in Settlements Act, a bill that would force details of agreements brokered between law-breaking corporations and the government to be made public.
“When government agencies reach settlements with companies that break the law, they should disclose the terms of those deals to the public,” Warren said.
If the Truth in Settlements Act were to pass, the government would be required to publish comprehensive reports about all such financial resolutions over $1 million. For additional transparency, the bill would require the government to explain why cases were settled privately.
The legislation seems so reasonable, in fact, that it is already a bipartisan effort. Tom Coburn, a Republican Senator from Oklahoma, is cosponsoring the Truth in Settlements Act. This across-the-aisle alliance could prove beneficial in seeing the bill go up for vote.
“Since agencies are not currently required to disclose the financial structure of government settlements, too often the true value of those settlements is not known because often companies are allowed to deduct part of the payment,” said Senator Coburn.
Indeed, when large figure settlements are released to the public, that often doesn’t paint a complete picture of the agreement a bank and the government have reached. Often, the deals include loopholes that allow the companies to pay just a fraction of the reported amount, though it’s the precise terms of these deals that are kept “confidential.”
Although less explicitly stated, the bill would not only force accountability on the part of corporations, but also the government. “Increased transparency will shut down backroom deal-making and ensure that Congress, citizens and watchdog groups can hold regulatory agencies accountable for strong and effective enforcement that benefits the public interest,” said Warren.
Last year, Warren famously made headlines when she asked bank regulators a straightforward question: “When did you last take a Wall Street bank to trial?” Tellingly, top U.S. officials couldn’t even think of a time they went to court over instances of multi-billion dollar fraudulent activities. Authorities tried to excuse this lack of prosecution by saying the settlements they were making with the corporations were tackling the issue sufficiently.
Now Warren has taken the next logical step and called them on their bluff. If the settlements are legitimately just, why are they shrouded in secrecy? Allow American citizens to see whether the federal government has represented their interests fairly and judge the terms of these settlements themselves.
Realistically, the corrupt backroom deals between big business and government goes much deeper than anything transparency alone can solve. However, the Truth in Settlements Act could certainly help to illuminate the full extent of the problem, which could then inspire even more critical reform.
Although the legislation is still in its early stages, Warren admits to being optimistic about its chances for getting through both the Senate and the House. “I gotta tell you, I feel good about this one. I mean, come on, who really wants to keep this stuff secret?” Warren asked a Bloomberg reporter. “Or, who wants to admit publicly that they want to keep it secret?” she added cheekily.
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