Transparency is in the public interest
When the Department of Justice announced last year that it had struck a record $13 billion settlement with JPMorgan, it didn't include that it was structured in a way that would allow the investment bank to claim much of the payment as a deduction from its tax bill.
Such settlements inevitably are complex, but that complexity should not diminish transparency.
Wednesday, liberal Democratic Sen. Elizabeth Warren of Massachusetts and conservative Republican Sen. Tom Coburn of Oklahoma jointly introduced a bill that would require much greater transparency regarding settlements with the government.
The Truth in Settlements Act would require any settlement of more than $1 million to include a detailed explanation of how the agreement will be categorized for tax purposes. Companies involved in such settlements would have to disclose in public filings with the Securities and Exchange Commission whether they deducted any settlement amounts from their taxes. Any federal agency involved in a settlement would have to post the related documentation on its website.
Congress should pass the bill. Such information is fundamental to determining whether a settlement truly is in the public interest.