Isn’t it odd how banks always seem to settle out of court for breaking the law? What is even more odd is that most of these settlement details are hidden from the public. Fortunately Elizabeth Warren has introduced a new bill with Senator Tom Coburn that would make all these back room deals public.
It’s called the Truth in Settlements Act and it would require accessible, detailed disclosures about these agreements so the public can hold regulators accountable for these deals.
Many times in the deals the announcement would come that “Bank A” would pay “x” amount of dollars as a fine, but what was not known to the public was that in exchange for this, the bank would now get a sweet tax break in a confidential deal. Doesn’t seem like much of an incentive to not break the law again, does it?
The bill takes several steps to accomplish this:
- It requires federal agencies to explain in written public statements that reference a settlement amount whether any portion of that “sticker price” is potentially tax-deductible or includes the cost of “credits.”
- It requires federal agencies to post basic information about settlements over $1 million on their websites.
- It requires companies that settle with enforcement agencies to state in their SEC filings whether they have claimed a tax deduction for settlement payments.
- It requires federal agencies to explain their reasoning publicly any time they deem a settlement confidential.
- And it requires federal agencies to report annual aggregate statistics on confidential settlements.Increased transparency will help ensure that Congress, citizens and watchdog groups – people like you and me — can hold regulatory agencies accountable for strong and effective enforcement.
You can sign up to show support for the Truth in Settlement Act here.