You've no doubt read over the years about banks being required to enter into multibillion dollar settlements after a government probe of its activities in the residential mortgage-backed securities market. Just about every major bank in the U.S. has been party of one of these settlements.

Where does the money go?

According to a fascinating piece in today's Wall Street Journal, it goes to fund allies, pet projects and legacy builders of the Obama administration:

The administration’s multiyear campaign against the banking industry has quietly steered money to organizations and politicians who are working to ensure liberal policy and political victories at every level of government.

The conduit for this funding is the Residential Mortgage-Backed Securities Working Group, a coalition of federal and state regulators and prosecutors created in 2012 to “identify, investigate, and prosecute instances of wrongdoing” in the residential mortgage-backed securities market. In conjunction with the Justice Department, the RMBS Working Group has reached multibillion-dollar settlements with essentially every major bank in America.

The recent settlements include one between Goldman Sachs and the Justice Department in April for $5.1 billion. Morgan Stanley agreed to a $3.2 billion settlement in February. The largest settlement was with the Bank of America for $16.65 billion. This consumer relief money was ostensibly to help homeowners harmed by bank practices, yet we don't know how much, if any, went to actual people. Instead it goes to groups:

Some groups on the list—Catholic Charities, for instance—are relatively nonpolitical. Others—La Raza, the National Urban League, the National Community Reinvestment Coalition and more—are anything but.

This is a handout to the administration’s allies. Many of these groups engage in voter registration, community organizing and lobbying on liberal policy priorities at every level of government. They also provide grants to other liberal groups not eligible for payouts under the settlements.

Thanks to the Obama administration, and the fungibility of money, the settlements’ beneficiaries can now devote hundreds of thousands or even millions of dollars to these activities.

The settlements also give banks a financial incentive to fund these groups. Most of the deals give double credit or more against the settlement amount for every dollar in “donations.” Bank of America’s donation list—the only bank to disclose exactly where it sends its money—shows how this benefits liberal groups.

The bank has so far given at least $1.15 million to the National Urban League, which counts as if it were $2.6 million against the bank’s settlement. Similarly, $1.5 million to La Raza takes $3.5 million off the total amount of “consumer relief” owed by the bank. There are scores of other examples.

Our analysis of over 80 beneficiaries from Bank of America’s settlement shows that they received, on average, more than 10% of their 2015 budgets from the bank. When other bank checks are added, the amount funneled to these organizations is guaranteed to rise. And the banks have multiple years to pay their total penalties, meaning some liberal interest groups can count on additional funding for years—and election cycles—to come.

This is a shakedown by liberal groups. Rep. Bob Goodlatte, Republican from Virginia, has a bill (Stop Settlement Slush Funds Act of 2016) to stop this practice. Congress didn't do anything last year when it had a chance, but it has another shot at this.