At the beginning of 2014, progressive Senator Elizabeth Warren joined with Republican Tom Coburn to introduce the Truth in Settlements Act.
According to a statement Warren put out, “when federal agencies close investigations and settle cases, they often tout the dollar amount obtained from the offender, but in many cases that amount is misleading because of tax deductions and other ‘credits’ built into the settlement that reduce the settlement’s true value. Worse, sometimes agreements are deemed confidential, with key details or even the fact of a settlement hidden from the public”.
The problems with the existing system surrounding settlements obtained by the federal government is that in an era when politics is increasingly shaped by corporate money and influence (“Free Speech”, in the words of the right-wing Supreme Court justices who conferred citizenship on corporations), we often don’t possess the information we need to assess whether a given settlement has been shaped by the long arm of the corporate class. Settlements can provide the illusion of punishment, when in fact depending on the facts of a settlement, there might be no incentive for corporate lawbreakers to change their behaviours. Or the amounts of a settlement can be so small that they amount to no more than a harmless slap on a wrist, leaving the public exposed to subsequent abuse.
The Truth in Settlements Act is designed to introduce transparency into this process. Coburn, an Oklahoma Republican, argued that the Act “gives taxpayers the transparency tools they need to access real information and numbers regarding enforcement settlements”. If both taxpayers and journalists have access to this information, it is less likely that the settlement system will be so openly abused.
On Friday, we got a good example of why we need such a law.
Earlier this year, JP Morgan paid out upwards of $16 billion in fines and settlements. Not, you would think, a year to be proud of. And yet the bank’s CEO, Jamie Dimon, is getting a hefty salary hike.
This tells us something interesting. If JP Morgan Chase believed that Dimon performed good service by ensuring that they only paid out $16 billion to compensate for their wrong-doing, there was clearly more at stake. If there was a chance that JP Morgan was going to get hit with a serious fine—i.e. one which might have led them to fire their CEO instead of give him a raise—it suggests that regulators might not have done their job properly. It suggests that Dimon is being rewarded for his ability to manipulate a system which is open to manipulation because of a lack of transparency.
When $16 billion in fines is a marker of a good year, and when your CEO who already takes home over $10 million needs a raise at a time when working people’s incomes have stagnated and the gap between the wealthy and the poor is enormous, something is terribly wrong. The Truth in Settlements Act addresses but one part of our country’s mangled financial and economic structure. But it is one of a set of laws introduced by Warren in the Senate which could do much to even the playing field, punish wrong-doing, and prioritise those who live on the economic brink without access to golden parachutes.
The fact that it is a brand-new Senator taking the lead on these issues is a demonstration of just how stagnant our political class has become. It also illustrates just how much we could use someone like Elizabeth Warren, not just as one of one hundred Senators, but as a presidential candidate taking her message across the country where it would contrast sharply with the economic fundamentalism of the Republican Party and the assurances Hillary Clinton is already offering corporate powerbrokers.
At a time when idiotic venture capitalists are claiming that asking them to pay more taxes is akin to the Holocaust, and being egged on in their selfishness by Republican Party leaders and the likes of Hillary Clinton, we could use a sharp, clear, moral voice like Elizabeth Warren’s advocating for equality and fairness in our country.