Mass. Democrat: Settlements need more transparency
Jan. 09, 2014
BOSTON (AP) — U.S. Sen. Elizabeth Warren is pushing legislation she says will hold federal enforcement agencies accountable by increasing public transparency of confidential settlements.
Warren said that when federal agencies settle cases, they often tout the dollar amount obtained from the offender. But in many cases that amount is misleading because of deductions and credits built into settlements that can end up reducing its true value, she said.
The Massachusetts Democrat teamed with fellow Sen. Tom Coburn, a Republican from Oklahoma, to introduce a bill Wednesday that would require all written public statements that reference the dollar amounts of settlements to explain how those settlements are categorized for tax purposes and whether payments may be offset by credits.
Companies would be required to disclose in their Securities and Exchange Commission filings whether they have deducted any or all of the dollar amounts of their settlements from their taxes and federal agencies would have to post basic information about settlements and provide copies of those agreements on their websites.
The bill would also require agencies to explain why confidentiality is justified and to disclose the number of settlements they deem confidential each year.
Warren said the changes are needed.
"These regulators don't work for the companies they regulate, they work for the American people," Warren said. "The public has the right to hold the regulators accountable."
Warren pointed to a 2013 settlement with 13 mortgage servicers, accused of illegal foreclosure practices. She said that regulators claimed the settlement totaled $8.5 billion but that more than half of the settlement value — about $5.2 billion — was in the form of credits the servicers could get for agreeing to modify or forgive loans.
Warren said the public statement didn't explain that the servicers could claim an entire credit by forgiving just fractions of large unpaid loans.