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Bush Defends Administration’s Prosecution of S&L Fraud

June 20, 1990

WASHINGTON (AP) _ President Bush defended his administration’s prosecution of savings and loan fraud and offered an olive branch Wednesday to Democrats critical of the effort.

″There has been an active prosecution under way,″ Bush told reporters at the Marshall Space Flight Center in Huntsville, Ala.

His remarks came a day after he reviewed the Justice Department’s anti- fraud effort with Attorney General Dick Thornburgh and after his spokesman, Marlin Fitzwater, attacked Democrats critical of the president’s handling of the S&L mess.

Bush, who is scheduled to address the nation’s 93 U.S. attorneys in Washington on Friday, said Thornburgh offered ″impressive numbers″ on the S& L fraud cases being pursued, adding ″I expect we’ll see plenty more.″

″Put those that are guilty into the dock, where they belong, and see that they are, you know, brought to responsibility for what they’ve done,″ he said.

Meanwhile, the House voted 420-1 Wednesday to provide the Justice Department with $75 million to fight white-collar crime in financial institutions during fiscal year 1991 beginning Oct. 1. At the administration’s request, Congress had provided $50 million in 1990, an amount Democrats said was inadequate.

On Tuesday, Fitzwater declared the administration ready to do political battle over the issue, citing several current and former Democratic members of Congress as vulnerable to criticism.

The spokesman mentioned Sens. Donald W. Riegle Jr. of Michigan, chairman of the Senate Banking Committee, Dennis DeConcini of Arizona and Bob Kerrey of Nebraska; former House Speaker Jim Wright of Texas; former Rep. Tony Coelho of California, and former House Banking Committee Chairman Fernand J. St Germain of Rhode Island.

″What he (Fitzwater) did was appropriate,″ Bush said. ″But what I’m trying to do is not respond to individuals and to simply keep moving forward on this process.″

Bush conceded that ″a spark seemed to be ignited there″ by Fitzwater’s remarks, but added, ″I think more important than continuing to pour fuel on the spark is to work cooperatively with the Congress in trying to get this mess solved.″

Democratic criticism of Bush’s management of the S&L bailout has been growing since last month, when the administration said Congress would have to provide a second bailout of $30 billion to $50 billion later this year.

Meanwhile, an organization affiliated with consumer activist Ralph Nader issued a report criticizing the administration’s ″anemic″ efforts to prosecute S&L fraud.

The report, by Public Citizen’s Congress Watch, estimated that the government’s civil and criminal actions have recovered only $300 million in S& L losses. That’s less than 2 percent of the $16.3 billion in losses attributed to fraud among the 440 S&Ls seized by the government since early last year, the group said.

″The Bush administration’s efforts to pursue and punish S&L fraud have been anemic at best, irresponsible at worst,″ said Sherry Ettleson, an attorney who prepared a 23-page report on the issue for the group.

The Nader organization faulted the administration for spending only an additional $50 million on pursuing thrift crime, when Congress had authorized spending of up to $75 million. The administration has responded that Congress eventually appropriated only $50 million and officials are spending that amount.

It said the Justice Department is pursuing 891 cases actively, compared with a backlog of 6,993 cases. Yet, the department has added fewer than half the 425 additional agents requested by the FBI and only 118 of the 231 assistant U.S. attorneys requested by the department’s field offices, the report said.

″Based on the record thus far, there is little evidence that the Bush administration is committed to catching and punishing white-collar criminals who largely caused the worst financial scandal in U.S. history,″ Ettleson wrote.

The group recommended that the administration spend more on pursuing fraud, turn its attention to accountants and lawyers who aided S&L executives in committing fraud and drop its support of proposed legislation that would remove the threat of triple damages from civil racketeering suits.

It said Congress should enact legislation that would permit whistleblowers to bring suit against alleged S&L criminals on behalf of the government and share in the damages if fraud is found to have occurred.

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