WASHINGTON -- Sens.
The bipartisan bill -- Warren is a Massachusetts Democrat and Coburn an Oklahoma Republican -- reflects widespread concern on Capitol Hill that banks such as
Those deals sometimes aren't as costly to the companies as they appear, the senators said.
"When government agencies reach settlements with companies that break the law, they should disclose the terms of those deals to the public," said Warren, who has been outspoken in criticizing the
More public information would "shut down backroom deal-making" and help hold regulatory agencies more accountable to
Federal officials often publicly tout the dollar amounts obtained in settlements, Warren and Coburn said, but those figures can be misleading because credits and tax deductions reduce the actual amount paid by the companies.
The proposed Truth in Settlements Act would require that all written public statements that refer to dollar amounts of settlements include explanations of how the penalties are categorized for tax purposes and if the payments are offset by credits given to the company for taking certain actions.
Warren and Coburn specifically criticized the $25-billion national settlement reached in 2012 among federal and state officials and five large banks to resolve investigations into foreclosure abuse allegations. The senators said the settlement amount was offset by $17 billion in credits given to the banks, "much of it for routine conduct," according to a fact sheet on the legislation.
The legislation would require federal agencies to post basic information on their websites about settlements of more than $1 million, along with copies of the agreements. If a settlement was confidential, agencies would have to explain why.
Companies involved in settlements would be required to disclose in regulatory filings if they deducted any of the payments from their taxes.
"Since agencies are not currently required to disclose the financial structure of government settlements, too often the true value of those settlements is not known because often companies are allowed to deduct part of the payment," Coburn said.
Last year, bills were introduced in the Senate and House that would prohibit tax deductions by companies for penalties paid as part of government settlements.
The U.S. Public Interest Research Group, which issued a report last year criticizing the ability of companies to deduct settlement payments, praised the legislation.
"The fact that these two senators who so often disagree came together on this bill shows a broad consensus that governmental deal making over corporate misdeeds should happen in full view of the public," said Francisco Enriquez, the group's tax and budget program associate.
"The public should know how much settlements are worth and whether they include hidden subsidies or sweeteners that taxpayers must ultimately foot the bill for," he said.