Scott Shackford on the Settlement Shakedown


Credit: Guy Kitchens / ZUMA Press

Under Attorney General Eric Holder, the Department of Justice has netted more than $100 billion in civil fines, settlements, and restitution for fiscal years 2012 and 2013. Criminal fines and settlements account for another $80 billion. Attorneys general throughout the 50 states have also learned to love massive payouts from banks and other big businesses accused of wrongdoing. Typically agreed to in exchange for dropping civil and criminal liability, these settlements in theory are supposed to compensate victims. But government agencies are often the biggest beneficiaries, creating an incentive structure that favors negotiation over prosecution and big corporate targets over discrete executive villains. As Associate Editor Scott Shackford explores in Reason's April issue, the combination can too easily lead to perversions of justice.