President Bush, facing a growing Democratic chorus accusing him of moving too slowly in prosecuting savings and loan fraud cases, used a campaign-style rally yesterday to announce increased anti-fraud efforts, including a doubling of funding the administration had repeatedly resisted.
With strains of "Hail to the Chief" echoing in the Justice Department auditorium, Bush told cheering U.S. attorneys brought to Washington from around the nation, "We will not rest until the cheats and the chiselers and the charlatans spend a large chunk of their lives behind the bars of a federal prison."
The Bush announcement, ridiculed by Democrats in Congress as a sham, was made at the end of a week of increasingly partisan wrangling over responsibility for the collapse of the thrift industry and the escalating cost of the cleanup.
White House press secretary Marlin Fitzwater fired the first partisan shot on Tuesday, warning Democrats that the GOP would highlight Democratic involvement in the thrift collapse if the Democrats tried to use the issue against Republicans. Democrats in recent weeks began coalescing around a theme of charging the Bush team with being party to the collapse of the industry and then coddling those who had gained from it.
Apparently undeterred by the White House warning, Democratic National Committee Chairman Ronald H. Brown described Bush's announcement yesterday as a "warmed-over rehash" of earlier prosecution plans and pointedly called for further investigation into the role of the president's son, Neil, as a onetime director of a Colorado thrift that later failed.
The president's announcement included a call for a doubling of funds for investigations and prosecutions of financial institution fraud, from $50 million this fiscal year to $100 million next year. Until yesterday, the administration had insisted it needed only $50 million for 1991.
Last year, the Justice Department turned down an additional $25 million that Congress attempted to appropriate, saying it had all the funds it could effectively use.
The administration also announced establishment of a special counsel to oversee a new financial fraud unit to coordinate all the government's thrift enforcement efforts. James G. Richmond, U.S. attorney for northern Indiana, was named to the post.
In addition, Bush announced the formation of a "rapid response team" to hit failing institutions on short notice, and a list of other bureaucratic and legal changes aimed at quicker response to thrift fraud. He also endorsed legislation that would allow prosecutors to use court-authorized wiretaps against financial institution fraud, allow the freezing of assets of defendants in civil fraud cases and prohibit the use of bankruptcy to avoid damages in fraud cases.
Bush and Attorney General Dick Thornburgh said that prosecutions would have moved faster if Congress had given the administration more money, a claim that set off a partisan explosion on Capitol Hill.
"To blame Congress is . . . really appalling," said Rep. Charles E. Schumer (D-N.Y.), who chairs the House Judiciary subcommittee on criminal justice. "For months, we have been asking the president to spend more money."
Schumer said Bush has attempted to fight savings and loan crime "with a pop gun" when "we need a cannon."
At a televised news conference, six Senate Democrats said they were disappointed that Bush had not asked for the extra $25 million for the current year. They also said they found little new in Bush's proposals. Sen. Timothy E. Wirth (D-Colo.), accusing the White House of staging a "photo opportunity with a lot of U.S. attorneys," said Bush was trying to give the impression he is doing more than he really is. "It's the kind of politics that sounds good if you say it fast enough," Wirth said.
Sen. Howard M. Metzenbaum (D-Ohio) said the administration is moving "only because the political heat is up. This is a sham for the president to be calling this an administration initiative."
The administration's complaint about Congress blocking funding reaches back to mid-1989, when Congress turned down the Justice Department's supplemental request for $36.8 million to pursue financial fraud cases. With that money, "we could have been moving even faster," Bush said in his speech.
Senate Minority Leader Robert J. Dole (R-Kan.) took the dispute back farther, complaining that Congress dawdled over a 1987 Reagan administration request for a $15 billion recapitalization plan for the industry, and then chopped nearly $5 billion from it. If Congress had acted quickly and done more, he said, "the size of the savings and loan bailout would be much smaller today."
"Some critics say George Bush is the 'S&L' president," Dole said. "Well, I say welcome to the S&L Congress: While Congress was snoozing, the American taxpayers were losing."
As of last month, the FBI had opened but was not actively pursuing more than 1,300 investigations of financial fraud involving more than $100,000, according to a Justice Department survey released by the House Government Operations subcommittee on commerce, consumer and monetary affairs. About 4,100 major cases are active.
With money appropriated last fall, the Justice Department is hiring 118 prosecutors and 201 FBI agents to handle the influx of complex, paper-trail cases. But that is only half of what the U.S. attorneys and FBI offices asked the department to provide.
Federal prosecutors and FBI agents in charge of several cities said yesterday the staff shortages are critical. "We have a significant backlog," said Robert Genzman, U.S. attorney for Tampa. "These cases take a lot of time."
"We need more people," said Robert L. Pence, special agent in charge of FBI's Denver office, which reported 56 inactive investigations of fraud involving more than $100,000.
Justice Department officials said yesterday they could not say how many prosecutors and agents they could hire with $50 million more, but Schumer and others said it would not cover the additional 113 attorneys and 224 FBI agents the local offices have requested.
Thus far, the biggest cases have come out of a 100-person bank fraud task force in Dallas. Prosecutors there have won convictions of 51 individuals, including all the top officers of a thrift whose failure cost the government $1.3 billion.
Staff writer Helen Dewar contributed to this report.