Under increasing criticism that his Justice Department is foot-dragging in savings and loan fraud prosecutions, President Bush announced an aggressive new effort Friday to crack down on S&L crimes.
"It takes a snake, a coldblooded snake, to betray the trust and innocence of hard-working people," Bush said in a speech to his administration's U.S. attorneys. "And so, if we have to look under rocks to find these white-collar criminals, then we will leave no stone unturned."The president will ask Congress to double the $50 million being spent this year on prosecutions. He also is pushing legislation to increase penalties for financial institution fraud, make it easier to catch the crooks and make it harder for them to shelter ill-gotten gains from confiscation.
Bush said Attorney General Richard Thornburgh will appoint a new special counsel for financial institutions to coordinate the effort and is setting up "rapid response teams" of lawyers and auditors that will be deployed on short notice across the country when a major fraud case is suspected.
The teams will "jump right into the paper chase," Bush said, and "hit the trail while that trail is still hot."
Not only has the administration taken heat from both Democrats and Republicans for the slow pace of S&L prosecutions, but the president's son Neil has been grilled before a congressional committee about his role in the $1 billion collapse of a Denver S&L.
Neil Bush repeatedly has contended he and his board of directors did nothing wrong but were the unlucky victims of a bad real estate market.
President Bush almost seemed to be pleading his son's case when he told the assembled prosecutors: "And where financial fraud is concerned, it takes a discerning mind and a determined spirit to distinguish the incompetent from the fraudulent, the unlucky from the unlawful, and this nation is very fortunate to be able to look to you, the United States attorneys of America, to make these tough calls."
With the S&L disaster taking on a sharp new political edge in the past two weeks, both Bush and Thornburgh honed the controversy by complaining that Congress hindered administration crime-fighting by taking more than a year to approve extra money for investigations and prosecutions.
It was a response to congressional complaints that the Justice Department has used only $50 million of the $75 million authorized for spending this year, while agents in the field say they need more money to do the job.
Congress has authorized another $75 million for 1991, and Bush will ask for an additional $25 million, the White House said. That would be a total of $100 million, or double the amount spent this year.
Congressional Democrats quickly attacked Bush's initiative.
Ohio Sen. Howard Metzenbaum said the administration is moving "only because the political heat is up," and Rep. Charles Schumer of New York said it was "too little and woefully late."
In countering congressional complaints about slow prosecutions, the Justice Department cited statistics that it won 791 major convictions (cases involving losses over $100,000) for financial institution fraud in 1989 and has been running 530 FBI investigations this year into failed financial institutions.
The nation's 93 U.S. attorneys were brought to Washington for a daylong briefing on the new initiative and the highlighted priority of S&L fraud prosecutions, as well for meetings to share techniques that experienced prosecutors and FBI agents have found useful in making S&L cases, a Justice Department spokesman said.
They would get several new tools in the proposed legislation, including the authority to use court-sanctioned wire taps in investigating bank fraud. The proposals also would let federal regulatory agencies ask the courts to freeze the assets of defendants in civil cases involving financial institution fraud, and would limit the use of bankruptcy as a strategy to avoid paying damages.