Thrifts : S&L; Fraud Probe ‘Anemic,’ Group Says

The Bush Administration’s “anemic” efforts to prosecute savings and loan fraud have resulted in the recovery of less than 2% of the money lost in the “worst financial scandal in U.S. history,” a consumer group charged Wednesday.

Public Citizen’s Congress Watch, an organization founded by activist Ralph Nader, estimated that the government’s civil and criminal actions have recovered only $300 million, while fraud at the more than 440 S&Ls; seized since early last year amounted to $16.3 billion.

“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 report, issued at a news conference, comes amid growing Democratic criticism of the Administration’s prosecution of S&L; fraud. Partisan furor on the issue has blossomed since the Administration last month said Congress would have to provide an additional $30 billion to $50 billion for a second bailout.

In an apparent attempt to blunt the criticism, President Bush is scheduled Friday to address the nation’s 93 U.S. attorneys. Atty. Gen. Dick Thornburgh summoned the top federal prosecutors to the meeting at the Justice Department, said spokesman Dan Eramian.

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 to 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 whistle blowers 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.