C. Boyden Gray Testifies Before the House on RMBS Settlements and Congress’ Power of the Purse

Former White House Counsel C. Boyden Gray testified Thursday before the Subcommittee on Oversight and Investigations of the House Committee on Financial Services, regarding Congress’ power of the purse. Recent Justice Department mortgage settlements related to banks’  conduct during the financial crisis with respect to residential mortgage-backed securities provided the backdrop for the hearing. Several of those settlements, among other things, direct banks to make payments to third-party groups rather than to the victims of the alleged violations or to the United States Treasury. In his testimony, Gray opined that directing settlements to third parties other than victims or the Treasury usurped Congress’ constitutional authority, circumventing the the Appropriations Clause and likely violating the Miscellaneous Receipts Act. Gray put his testimony in the context of other arrogations of the power of the purse by the Executive Branch, urging Congress to act in a bipartisan manner to reclaim the power of the purse and restore its essential role in representative government.