We should stop a disturbing new practice of funding programs through lawsuit settlements when the legislature refuses to fund

Bill HaleyUncategorized

Government officials are people just like everyone else. Many people want to control others. Some take the power of government to exert their control. They use powers from all three branches of government. This blog concentrates on using the judiciary branch. Of course, the other branches and advocacy groups play a very big role in using the courts for their control.

I will start with the new deceptive practice and then fill in some old but still concerning techniques. I have started to notice that governments are settling lawsuits in a way that matches their legislative agenda that they cannot get through Congress. I believe they, the Left, in the Executive branch, are not getting certain funding and policy through Congress.

So they are inviting, behind the scenes, groups to sue them, the federal government. The executive department then ‘settles’ the case in a manner they, the fed’s, always wanted. The federal government’s budget has a lawsuit settlement budget  now used often as a slush fund for certain desired programs desired by the fed’s by ‘claiming’ they ‘have to’ because of the court settlement.

For example, Attorney General Eric Holder agreed to pay the plaintiffs $3.4 billion, $2 billion of which would be set aside for a land consolidation scholarship program to benefit Native American investments. Congress did not pass this, it is just a sneaky way to fund a program they wanted.

Another technique is that government sues a company and gets awarded a lot of money. Then government officials state that if they ‘voluntarily’ give to an advocacy group dealing with the issue, they will get a 200% credit for the donation. Meaning if they give $1 million to a group that helps the poor get housing, the guilty of discriminating bank would have $2 million taken off their judgement. Of course, these groups are made up of the Left.

We see the same when it comes to drug companies. The government bureaucrats know they can extract any concession from pharmaceutical companies when they hold the keys to FDA approval. The number of FDA rules are very concerning. Some are vague and others contradictory. This is a lawsuit haven.

When tens or hundreds of millions of dollars are at stake, concessions and settlements are easily extracted. The drug companies end up ‘voluntarily’ funding programs outside of government that the executive bureaucrats wanted and could not get through Congress.

Many people claim that they need government to ‘protect’ people from greedy companies. That is an ill-informed judgement of free enterprise. The greatest protection is being able to switch companies if someone or a company treats you badly. My idea of a ratings system within free enterprise regulatory reform could help protect people with knowledge. Sunshine is the best disinfectant.

There is a common argument that laws against price gouging, predatory pricing, and collusion can always be threatened. One is pricing too high, one too low, and collusion is when you match prices with competitors. Many companies have been threatened and usually give in to government’s or politician’s demands.

We saw Microsoft not playing ball with politicians concerning campaign donations slapped with a major monopoly lawsuit. This company and industry is in a constant flux with any appearance of monopoly vanishing in months. Almost everything Microsoft had in the late nineties was obsolete by the time when they settled a few years later.

The 25-year, $246 billion tobacco settlement should be viewed more like a tax then a lawsuit win. The purchaser of cigarettes is paying higher prices and then government collects it from the stores. It is put in the general budget and spent on general budget items. Some states have built programs with this settlement money as its main funding source. Government makes an insane claim that government is responsible for medical care and then states tobacco is harming health so they should pay. WOW, that is ripe for abuse and major government’s control.

Banks were forced by regulators and the Justice Dept. to predatory lend. Very heavy pressure came from the justice department to increase minority lending. They were denied branches, mergers, and other necessary business practices until they had higher lending to the black population. They had to lower standards for black populations, which is a big part of predatory lending. This greatly harmed many black families because higher standards protect BOTH the lender and the home owner.

The Left then sued the banks for predatory lending. Similar to the pricing issue above, the banks are sued either way and sometimes literally both at the same time. Sorry, but if the average black family has dramatically different net worth, income, and credit history, they will have different lending rates if the banks use the same standards for everyone. The disparity between whites and blacks is true, however, the reasons for the disparity are a different blog. The point here is that you do not help black people by lowering standards. The greater point for this blog is the “damned if I do and damned if I don’t” regulations.

Civil asset forfeiture is a little different, however still very concerning. Some police departments budget in certain amounts of money coming in from forfeitures. This creates a situation that the policemen’s job is threatened if they don’t steal from citizens to fund their paychecks.

Always remember that consumers ALWAYS pay for the high cost of defending lawsuits and the cost of the judgments. Consumers are the ONLY place where companies get their money. However, these millions and billions of dollars also negatively impact payroll and investments in future growth of the company.

While necessary in certain circumstances, let’s always be aware that these judgments take money away from employees and future employees up and down the pay range. Often after certain large judgments, major company budget cuts are announced to cover the costs. Also ‘sticking it’ to publicly traded companies means harming retirement plans that invest capital in those companies.

While most of my information comes from speeches and articles over the years that I remember, here are some links to some stories that illustrate some of my points. All quotes in the gray boxes came from these linked stories.
https://en.wikipedia.org/wiki/List_of_largest_pharmaceutical_settlements

$23.6 Billion Lawsuit Winner to Big Tobacco: “Are You Awake Now?”

The Most Expensive Lawsuit Settlements Ever

Lawsuit settlements cost federal government more than $575M in 2015

https://en.wikipedia.org/wiki/Dukes_v._Wal-Mart_Stores,_Inc.

http://www.marketwatch.com/story/heres-where-all-the-bank-fines-go-2015-05-20

http://www.investopedia.com/terms/f/fairfundsforinvestors.asp

http://fortune.com/2016/03/10/bank-mortgage-fines-wall-street/

http://www.miamiherald.com/news/business/banking/article98087702.html

http://www.wsj.com/articles/SB10001424127887323808204579084932990175004

http://www.npr.org/2013/10/13/233449505/15-years-later-where-did-all-the-cigarette-money-go

https://topclassactions.com/lawsuit-settlements/lawsuit-news/47283-top-class-action-settlement-payouts-2014/