Stop Settlement Slush Funds Act of 2026

This bill prohibits federal officials from using settlement agreements to direct payments to third parties unless those payments directly compensate for actual harm caused by the defendant or pay for services rendered in the case. It prevents the government from creating slush funds through settlements that benefit unrelated organizations or individuals beyond the scope of direct restitution. Federal agencies must annually report to the Congressional Budget Office on settlement payments that meet the new criteria, while agency inspectors general must audit and publicly report any violations. The reporting and audit requirements are set to expire seven years after the law takes effect.