Republican Senate Report Parrots Right-Wing Media’s “Slush Fund” Conspiracy Theory

Disbursements From Financial Institutions Directly Help Communities And Homeowners

Republicans Are Echoing Years Of Right-Wing Media Scandal-Mongering

Right-Wing Media Have A Long History Of Smearing The National Council Of La Raza

Right-Wing Media Have Long Record Of Denying Big Bank Culpability And Criticizing Any Type Of Settlement

Republican Senate Report Parrots Right-Wing Media’s “Slush Fund” Conspiracy Theory

Relying On Wall Street Journal Column, GOP Report Attacks “Controversial” Nonprofits That Received Money From DOJ Settlements. In a May 2016 report issued by the Republican majority staff of the Committee on Homeland Security and Governmental Affairs (HSGAC), chairman Sen. Ron Johnson (R-WI) complained that three “controversial housing counseling groups” had received funding through a dispute settlement mechanism created by the Department of Justice (DOJ) and three major financial institutions -- Bank of America, Citigroup, and JPMorgan -- to account for the banks' role in the housing and financial crisis. The banks have agreed to pay a combined $36.65 billion in legal settlements to the DOJ due to their roles in the housing crash and financial crisis, a fraction of which (0.01 percent) the banks were incentivized to pay to “third-party groups.” Senate Republicans find three of these groups -- the National Council of La Raza, the National Community Reinvestment Coalition, and the National Urban League -- politically disagreeable because they allegedly “participate in partisan politics.” Despite the relatively small disbursements earmarked for the three supposedly offending groups, the report still quoted a misleading figure from a conservative Wall Street Journal columnist to claim that the DOJ was “funneling more than half-a-billion dollars to liberal activist groups” -- which also include nonprofits like Catholic Charities, Habitat for Humanity, and Operation Hope. From the GOP staff report (emphasis original):

Observers have criticized the DOJ’s settlements as “a textbook case of outrageous executive overreach” and as “a scheme to undermine Congress’s spending authority.” The Wall Street Journal opined that the DOJ “is in the process of funneling more than half-a-billion dollars to liberal activist groups.” The DOJ also incentivized banks to donate to these third-party organizations rather than to pay the entire settlement directly to aggrieved homeowners.

[...]

i. Controversial housing counseling groups receive funds under the settlements that Congress cut from the federal budget

While the DOJ does not have a direct role in distributing consumer relief funds to each specific third-party group, the settlements signed by the DOJ require the banks to distribute money to organizations that provide community development, housing counseling, and mortgage assistance. For example, Bank of America has distributed money to the following groups:

• The National Council of La Raza ($1.5 million);

• The National Community Reinvestment Coalition ($2.6 million); and

• The National Urban League ($1.15 million).

The settlement agreements, however, do not specify how these third-party groups must precisely use the funding.

[...]

The lack of oversight of consumer relief funds distributed to third-parties is problematic because many of the recipient groups actively participate in partisan politics. Many of these groups participate in administrative proceedings in the context of regulatory enactment, modification, and enforcement. La Raza employees sat or are sitting on federal advisory committees, and the National Community Reinvestment Coalition is one of several influential affordable housing non-profits that are working with HUD on re-writing Affirmatively Furthering Fair Housing regulations. These groups participate in partisan politics and there is little guarantee in the settlement agreements that the funds received by the third-party groups are used only for housing assistance programs. [United States Senate, Committee on Homeland Security and Governmental Affairs, 5/18/16]

Disbursements From Financial Institutions Directly Help Communities And Homeowners

Donations “Go Directly To Helping Homeowners.” In response to unfounded criticism from Republican members of Congress that Department of Justice (DOJ) settlements would “serve as a vehicle for funding activist groups,” two of the groups targeted by the GOP inquiries -- NeighborWorks and the National Council of La Raza (NCLR) -- pointed out donations would go to “community development” and “helping homeowners” (emphasis added):

The groups are meant to help homeowners avoid foreclosure. But in a letter dated Tuesday and reviewed by The Wall Street Journal, Rep. Bob Goodlatte of Virginia and Rep. Jeb Hensarling of Texas describe some of the nonprofits, such as National Council of La Raza and NeighborWorks America, as left-wing “activist groups.”

[...]

NeighborWorks’ board is chaired by top regulators from the Office of the Comptroller of the Currency, the Federal Reserve and other agencies. A spokesman said that NeighborWorks’ foreclosure-prevention program has helped 1.8 million homeowners since 2009.

“What we are about,” said spokesman Douglas Robinson, “is community development through access to quality housing.”

Lot Diaz, vice president of housing and community development at National Council of La Raza, said that any money the group might receive through the DOJ settlements would go directly to helping homeowners. [The Wall Street Journal, 11/25/14]

Urban Institute: Banks Can Get Double Credit For Donations To Groups That Serve Critical Needs. The Urban Institute outlined ten praiseworthy provisions of the DOJ’s roughly $17 billion settlement with Bank of America in a September 30, 2014, blog post. The Urban Institute approvingly noted that, pursuant to the terms of the settlement, banks could get double credit for voluntary donations made to nonprofits and community groups that serve critical needs and work on rehabilitation, maintenance, and community development:

9. Double credit for certain donations. Donations to (i) non-profits to assist with rehabilitation and maintenance of the donated properties; (ii) to Community Development Financial Institutions, land banks, and community development funds; (iii) to state-based Lawyer's Trust Accounts for legal aid related to foreclosure prevention and community redevelopment; and (iv) to HUD housing counselors, are credited at $2 for every $1 donated--with a $100 minimum for items (ii) through (iv.) [Urban Institute, 9/30/14]

NPQ: Attack On Certified Third-Party Counseling Services “Brings A Whiff Of Partisan Politics With It.” A March 19, 2015, article by Nonprofit Quarterly columnist Rick Cohen explained how the criticism of certified third-party foreclosure counseling services provided by NCLR, NeighborWorks, and other groups “brings a whiff of partisan politics with it.” Cohen explained how “organizations that had provided foreclosure counseling services, both on federal contracts and through the resources provided by settlement agreements” had come to be labeled as “left-wing community organizers” during a Republican-led congressional hearing by Rep. Bob Goodlatte (R-VA). Ultimately, the analysis concluded that these attacks on nonprofits like NCLR were the result of “some very conservative Republicans, who are out to attack community-based nonprofits that stand up for financially troubled homeowners and defend the banks that created the trouble in the first place”(emphasis added):

For those who know NeighborWorks and the community-based nonprofits that are members of the NeighborWorks network, calling them “left-wing community organizers” is hard to understand, to put it mildly, given that the NeighborWorks America board is made up of representatives from the Federal Reserve, the National Credit Union Administration, and the Comptroller of the Currency, and the composition of many NW community members’ boards has plenty of bankers, reflecting the roots of the NeighborWorks movement.

[...]

Although Goodlatte didn’t immediately identify the source of that quote, later in the hearing it was revealed that the comment appeared to have come from Paul Larkin, a research fellow at the Heritage Foundation, who was one of the hearing witnesses.

Goodlatte and his colleagues also used the hearing to attack the National Council of La Raza and other organizations that had provided foreclosure counseling services, both on federal contracts and through the resources provided by settlement agreements (even though it was the banks, not DOJ, that typically chose the third party entities like NeighborWorks and La Raza, so long as they were HUD-certified housing counseling agencies, to implement the counseling components of the settlement agreements). After criticizing the Justice Department’s oversight of these settlement agreements, Goodlatte concluded, “For DOJ to funnel money to third parties through settlements this way may violate the law and is undoubtedly bad policy.” [The Nonprofit Quarterly, 3/19/15]

Republicans Are Echoing Years Of Right-Wing Media Scandal-Mongering

Wash. Examiner: DOJ Settlements Used To Fund “Liberal Activist Groups” With “Extreme” Stances On Immigration. An uncritical Washington Examiner article from May cited Johnson’s report as well as comments from Rep. Sean Duffy (R-WI) to claim that the Department of Justice (DOJ) had created a series of “unusual bank settlements to fund liberal activist groups without the consent of Congress, rather than help the victims of the housing crisis.” The article placed particularly emphasis on the National Council of La Raza (NCLR), which it quoted Johnson describing as “being particularly extreme in its views on immigration” and possibly “promot[ing] illegal immigration.” [The Washington Examiner, 5/20/16]

Daily Caller: DOJ Created A “$500 Million ‘Slush Fund’” For Liberal Groups. According to a Daily Caller article, Rep. Duffy claimed that the investigation proved the DOJ “created what he called a $500 million ‘slush fund’ that could be steered toward favored groups” like NCLR. On May 20, The Daily Caller admitted that NCLR “is one of 37 certified housing counseling agencies approved by [the Department of Housing and Urban Development] since 1998,” but still suggested that the organization might be undeserving of managing the settlement disbursements because it is “flush with money.” [The Daily Caller, 5/20/16]

WSJ: DOJ Settlement Payments Are “A Textbook Case Of Outrageous Executive Overreach.” The December Wall Street Journal column later cited by Senate Republicans claimed that the supposedly “lawless Obama administration” exhibited “a textbook case of outrageous executive overreach” in setting up a system wherein the institutions responsible for the financial crisis could disburse money to nonpartisan and nonprofit organizations trying to ameliorate the lingering effects of that crisis. The Journal column claimed to reveal a “scandal” in which the government was “funneling more than half-a-billion dollars to liberal activist groups, at least some of which will actively support Democrats in the coming election.” The column also highlighted the same nonprofit groups later singled out by Senate Republicans -- the National Council of La Raza, the National Urban League, and the National Community Reinvestment Coalition -- with accusations that the disbursements would help “to wage an assault on voter ID laws, or to help out Democrats” rather than help needy families. [The Wall Street Journal, 12/3/15]

Fox News Attempted To Scandalize NCLR’s Inclusion Among “Financial-Counseling Agencies” That Received Settlement Funds. An article posted to FoxNews.com in February 2015 reiterated complaints from Republican members of Congress who took offense to the Obama administration allowing money from “recent mortgage-lending settlements [to] go toward favored advocacy groups.” The article hyped “concerns” about “liberal-leaning groups such as the National Council of La Raza” and the National Urban League -- groups it called “activist” -- being eligible to receive a portion of settlement funds. [FoxNews.com, 2/9/15]

Townhall: “Chicago-Style Attorney General” Using Settlements “To Shore Up The War Chests Of Progressive, Liberal, And Democrat Non-Profit Organizations.” An August 2014 column for Townhall by conservative columnist Michael Schaus accused then-Attorney General Eric Holder of “corruption” and labeled him “the nation’s top extortionist officer” for his role in setting up disbursements of “record breaking settlements” against JPMorgan and Bank of America “to shore up the war chests of Progressive, Liberal, and Democrat non-profit organizations” like “La Raza” and the defunct community group ACORN. [Townhall, 8/30/14]

Right-Wing Media Have A Long History Of Smearing The National Council Of La Raza

Fox & Friends Accused NCLR Of “Promoting Voter Fraud.” Fox & Friends co-hosts Steve Doocy, Anna Kooiman, and Brian Kilmeade baselessly attacked NCLR for “promoting voter fraud” in October 2014, after the organization retweeted a Washington Post report detailing how strict voter ID laws prevent American citizens from voting. Kooiman accused the group of using a “pro-Democrat hashtag” despite its claims of nonpartisanship. NCLR responded to Fox’s criticism, stating that “it is not only woefully incorrect, it is irresponsible and deliberately deceptive” to claim that the organization was leading “an attempt at fraud.” [Media Matters, 10/30/14, 10/30/14]

Right-Wing Media Launched Attacks At NCLR After A Former Employee Was Appointed By The Obama Administration. Conservative outlets responded with vitriol after the January 2012 appointment of former NCLR senior vice president Cecilia Muñoz as the director of the White House’s Domestic Policy Council. Right-wing media figures labeled NCLR a “radical identity politics-drive group” and attacked the group for allegedly pushing “illegal immigrants to brazenly defy U.S. law,” while falsely accusing Muñoz of being “an open-borders advocate.” [Media Matters, 1/13/12]

Michael Savage Labeled NCLR As One Of “The Most Violent Elements Of The Hispanic Supremacist Movement.” In 2010, right-wing talk radio host Michael Savage attacked NCLR for supposedly representing “the most violent elements of the Hispanic supremacist movement” and serving as “a front group for the retaking of the Southwest” by Mexicans. Savage had previously referred to NCLR as “the Ku Klux Klan of Hispanic People.” [Talk Radio Network, The Savage Nation, 6/4/10, 5/17/07]

Fox’s Glenn Beck Once Compared NCLR To “Neo-Nazis” And “Bloodthirsty” Drug Gang. Former Fox News host Glenn Beck equated NCLR with “neo-Nazis” and claimed it represented “a danger to society” during the April 19, 2010, edition of his Fox News program. He went on to compare the group to the “bloodthirsty, notoriously violent drug gang” Mara Salvatrucha, more commonly known as MS-13. [Fox News, Glenn Beck, 4/19/10, 4/19/10]

WND’s Joseph Farah Labeled Sonia Sotomayor “A Racist” While Comparing NCLR To Neo-Nazis And The KKK. WorldNetDaily editor-in-chief Joseph Farah labeled Supreme Court Justice Sonia Sotomayor as “a racist” for her ties to NCLR soon after she was nominated to the court in May 2009. He went on to call NCLR “a racist hate group” and “a band of ‘Hispanic supremacists’” similar to the KKK and “neo-Nazi scum.” [Media Matters, 5/31/09]

Fox’s Hannity Falsely Claimed NCLR “Has Called For Mexico To Annex Southwestern States.” Fox News host Sean Hannity falsely claimed during the February 26, 2009, edition of Fox News’ Hannity’s America that NCLR “has called for Mexico to annex southwestern states.” Hannity’s statement prompted a response from NCLR, which labeled his remarks a “lie,” demanded an on-air correction, and remarked “Such conspiracy theories would be silly if they were not so often used to create fear and distrust of all Hispanics living in America.” [Fox News, Hannity’s America, 2/26/09; Media Matters, 2/27/09]

Right-Wing Media Have Long Record Of Denying Big Bank Culpability And Criticizing Any Type Of Settlement

Fox’s Gasparino Decried Mafia-Like “Shakedown” Of Bank Of America. In response to the record-setting $16.7 billion settlement brokered between the Department of Justice (DOJ)and Bank of America, Fox Business correspondent Charles Gasparino claimed on the August 21, 2014, edition of Fox News’ Your World that the settlement was “a shakedown” and slammed federal prosecutors for acting “like the mafia.” [Fox News, Your World, 8/21/14]

WSJ: JPMorgan Settlement Is A “Shakedown” And “Medieval Justice.” In 2013, the editorial board of The Wall Street Journal wrote that the JPMorgan Chase & Co. settlement was a “watershed moment in American capitalism,” and “like medieval justice.” The board claimed that “Federal law enforcers are confiscating roughly half of a company's annual earnings for no other reason than because they can and because they want to appease their left-wing populist allies.” From the editorial:

But like medieval justice, the left wants perp walks, if not heads on pikes. The assumption is that if there aren't indictments, then prosecutors must be going easy on the bankers. Poor Lanny Breuer, the former head of the Justice Department Criminal Division, was vilified for not indicting enough bankers, as if he didn't try.

The truth is that he didn't indict bankers because the 2008 crisis wasn't the result of bank fraud, despite liberal mythologizing. It was a classic credit panic caused by bad government policy coinciding with the rational exuberance of bankers who were responding to the incentives for excessive risk-taking that government created.

[The Wall Street Journal, 10/21/13]

Fox’s Gasparino Compared JPMorgan Settlement To “McCarthyism.” Fox Business correspondent Charlie Gasparino claimed on the October 21, 2013, edition of Fox News’ America’s News HQ that JPMorgan was targeted by the Justice Department for CEO Jamie Dimon's criticism of the Obama administration, saying JPMorgan was accordingly the victim of “criminality” and has “no shot [against government prosecution] when you're up against this type of McCarthyism.” [Fox News, America's News HQ, 10/21/13]

Fox’s Varney: JPM Settlement “Looks Like Heavily Politicized Prosecution.” On the October 21, 2013, edition of Fox News' America's Newsroom, Fox Business host Stuart Varney said of the JPMorgan settlement, “In my opinion, this is an attempt to pin all of the blame for the crash on Wall Street and pin it on the banks as well.” Varney continued, “It looks like a heavily politicized prosecution in which Wall Street is taking all of the blame for the crash of 2008.” [Fox News, America's Newsroom, 10/21/13]

WSJ’s Kissel Falsely Claimed No American Homeowners Were Wrongly Injured During Financial Crisis. During a Fox Business panel discussion of JPMorgan’s robust quarterly profits for the third quarter of 2013, Wall Street Journal editorial board member Mary Kissel turned the conversation toward the alleged government “shakedown” of banks responsible for the financial crisis. Kissel lamented the demonization of Wall Street and bizarrely claimed that the financial industry had done nothing to deserve such scrutiny, while falsely asserting “there hasn’t been a single homeowner” wrongly injured or foreclosed on by a bank during the housing crisis. [Media Matters, 10/11/13]

Karl Rove Passionately Defended Big Banks Against DOJ “Stick-Up” In WSJ Op-Ed. In a May 19, 2011, op-ed published by The Wall Street Journal, Fox News contributor and former Bush administration senior adviser Karl Rove defended banks against the threat of DOJ prosecution by baselessly claiming that a proposed $20 billion settlement amounted to a “stick-up” and would be used for “election year bribe[s].” [Media Matters, 5/19/11]