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Why Do Lawbreaking Companies Get to Settle Secretly?

Why Do Lawbreaking Companies Get to Settle Secretly?

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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Photo Credit: Thinkstock

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115 comments

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10:55PM PST on Feb 5, 2014

Pass the Truth In Settlements Act... corruption is destroying our country.

6:12PM PST on Jan 18, 2014

What's going on with the Care2 website? I keep getting warnings from my computer protection service that Care2 contains dangers that could access my financial info?

3:28PM PST on Jan 16, 2014

Common citizens are ignorant about what goes on in our congress by our elected officials. The likes of the Koch brothers use their excessive wealth to buy favors from these elected tools. This is another reason the S/C decision to allow unlimited money to control our elections was just another favor to these elite. The use of money to buy our elected officials favor is ruining our democracy. These rich parasites are now using this wealth to obstruct the ability of the 98% of citizens to register and vote in all elections. They will harm the poor and middle class in any way they can to keep them from voting since they know they don't have the votes among their wealthy friends, and their base of racists and ideologues are quickly being out numbered by the common citizens among the poor and middle class. Their present agenda to starve, or use any means to keep the majority from voting is un-American and immoral.

12:27PM PST on Jan 14, 2014

I am not holding my breath. Do you really think the House would pass this even if it gets through the Senate?

11:05AM PST on Jan 14, 2014

Most corporations, if caught, only pay a small portion of their illegal/ fraudulent profits in fines. The persons responsible are being exempted from trail, so there is no possible punishment for their crimes. Moreover, government and the courts usually keep the fines and the reason for the fines secret. In addition, corporations are allowed to take payment of the fines as a business expense to be deducted from their taxes. Thus, corporate crime has become very profitable and low-risk. Warren's proposed bill needs to be much stronger to help prevent all the above.

2:29PM PST on Jan 13, 2014

This is a huge can of greedy worms. Senator Elizabeth Warren's "Truth in settlements act"is big step toward righting this wrong. Our nation would be so much better if our other powerful government members had the courage, commonsense and integrity as Senator Warren.

7:27AM PST on Jan 13, 2014

Rich, and powerful corporations are above the law, and make their own rules. Big corporate banks are criminal organizations that give people low interest rates on their savings, while they make much higher rates on investments. The massive amounts of money these big corporate banks, have, allows them to circumvent the law, by paying off bank regulators judges, lawyers and venal politicians.

7:20AM PST on Jan 13, 2014

Subsidies and protection from bad publicity are part of the perks of supporting your congressman.

12:51AM PST on Jan 13, 2014

Unbelievable. I for one, didn't know something like this could be kept secret! So while NSA spies civilians and nose around in what is none of their business, people in the USA are not allowed to know if they consume GMO food or what the US Govt accepts as "just returns" when private companies have broken the rules and wronged the people in some way! And that's a democracy? Really?

11:19PM PST on Jan 12, 2014

Does this obvious question really need to be answered? It's the new version of the golden rule: those who have the gold make the rules, and corporations are the ones who have most of the gold. The original version of doing unto others as you would have them do unto you doesn't apply to greedy psychopaths.

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