Press Conference With Senator Patrick Leahy; Senator Ted Kaufman; Senator Amy Klobuchar

Press Conference

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SEN. LEAHY: Have to get used to our new gallery.

This morning actually in about 15-20 minutes, we'll finally proceed to the Fraud, Enforcement and Recovery Act. I think the consideration is long overdue. It was unnecessarily delayed. This is anti-fraud legislation.

We know the kind of fraud that's going on especially in the mortgage area around this country. With this legislation, we hope we can help rebuild our nation's capacity to investigate and prosecute mortgage and corporate frauds. These are frauds that have contributed to the situation -- the economic crises we're in already. It will provide tools for law enforcement. It will provide needed laws for them and we looked at something like this back two decades ago during the savings and loan crisis and we took steps necessary to hold people accountable for the damage.

Every one of us, we go home on weekends. We hear the same thing. Who is going after the people that caused this fraud? I believe very strongly that we need to.

Senator Kaufman and I introduced this legislation with Senator Grassley in February. In March, the Judiciary Committee overwhelmingly voted support for legislation. Virtually all legislation I bring to the floor, it's bipartisan and has more than a dozen Senators as co-sponsors. It should pass the Senate without further delay, and this shows what's happened, I mean, here's the area of mortgage fraud. In 1998, you see the chart down here and look where it was by last year. I mean, its gone up 680 percent over the past five years, more than 2,800 percent in the past decade.

We're losing more than $4 billion each year to mortgage fraud alone and then you have massive new corporate frauds like the $65 billion Ponzi scheme of Bernard Madoff. This is doing even more. In the past two weeks alone, the Justice Department announced prosecutions in mortgage and securities scams involving more than $200 million in fraud. Even in my own little state of Vermont, we uncovered a $26 million mortgage scam involving more than 50 properties.

What we want to do is recover money from these mortgage scams, but we want to help the people. We want to protect the people who are losing their life savings, losing their homes because of mortgage scams, and I want to do more than just have fines, you know, if someone is doing a $100 million mortgage scam and they get a $10 million fine, it's just part of the cost of doing business.

If they think those who are doing it are actually going to go to jail and spend time in jail, they're going to think twice. There are a lot of vulnerable people in this country with this economy, a lot of vulnerable people are losing their homes, are losing their life savings to scams and mortgage fraud. We want to give the Justice Department the teeth so they can stop it.

Senator Kaufman?

SENATOR TED KAUFMAN (D-DE): Thank you. Thank you, Mr. Chairman, for your continued leadership on this thing.

The American people as the Chairman said are outraged and rightly so with the abuses that rock the financial sector. This is a good bill, plain and simple. And what I want to do is, very quickly, go through eight important reasons why this is an important piece of legislation. Number one, this bill is a critical step to restoring investor confidence in the financial markets by assuring the public and criminal behavior by unscrupulous mortgage brokers and corrupt financiers will be prosecuted and punished.

Two, this bill is a deterrent. Prosecuting white-collar crime today sends a message to those who will be tempted to cheat and defraud again.

Three, this bill rebalances law enforcement resources. After September 11th, many federal agents were rightly deployed from criminal work to counterterrorism, but unfortunately, never replaced.

Four, this bill helps ensure the sophisticated criminals can't cover their tracks and escape liability. Unless we get more agents working on these cases soon, the trail will go cold.

Five, this bill modernizes several areas of federal fraud law, among other things, it updates the definition of financial institutions to cover mortgage lending businesses that are not directly regulated or insured by the federal government.

Six, this bill is money well spent. The taxpayers have paid billions for bailouts. We should spend the millions it will take to find and prosecute all those who should be in jail.

Seven, this bill is an investment. History tells us that funds spent on fraud enforcement net money for the government at a rate of about $15 recovered for every dollar spent. This is an investment we cannot afford not to make.

Finally, and really probably most important, this bill will make it clear to all Americans that we hold Wall Street to the same standards as Main Street. If you break the law, you suffer the consequences. Well, many banks and mortgage brokers avoided the subprime market and acted responsibly, respect for the rule of law demands that we identify, investigate and punish those who knowingly self-dealt millions of dollars to line their own pockets while leaving investors in the dark.

I'm looking forward to swift action the American people demand to restore faith in our financial markets and the rule of law.

Again, I want to thank Chairman Leahy and introduce a great Senator and a great partner on this bill, Senator Klobuchar.

SENATOR AMY KLOBUCHAR (D-MN): Thank you very much, Senator Kaufman. You all know I'm a new member of the Judiciary Committee, and I will say as I looked at this bill and talked to my colleagues about it, I feel like I lived the reason for this bill because when I was county attorney was when 9/11 happened and I saw first hand, we had an office of 400 people that I ran and I saw first hand that our federal resources understandably were focused on some of the terrorism, especially in Minnesota where they captured Moussaoui and we had a number of cases. What it meant was that our local prosecutors group suddenly was deluged with white-collar cases, particularly embezzlement cases, and while we used to handle a few a year, we were handling hundreds and hundreds a year and I was proud of the work that our staff did, but I saw first hand the change in federal resources and as I've learned from FBI Director Mueller and the Justice Department that while there's been some adjustment, there's still a huge gap in white-collar prosecution.

As my colleagues, my great colleagues here mentioned, there can be a lot of deterrence in this area if you actually prosecute these cases. You know you're not going to catch every one, but when you prosecute them, these type of criminals, these types of crooks watch.

We had a case in Minnesota where we prosecuted nine pilots for tax evasion. They got post office boxes in Florida and were pretending they lived there, they were commercial airline pilots. We prosecuted those cases. They all got convicted, and as a result, millions of dollars went into the coffers for the Minnesota Department of Revenue. Why? There were other people doing the same things.

These kinds of scams -- if you just let them go, they just get bigger and bigger and bigger as we see from individual cases like the Madoff case or they spread and other people feel that they can do it because they know other people are doing it.

That's why it is so incredibly important to get this done on the federal level. It's going to strengthen a whole network of agencies that are involved in prosecuting white-collar crimes from the U.S. Attorney's Office to the Department of Justice, criminal and civil and the tax division, to HUD, to the Secret Service, to the U.S. Postal Service.

This is what we need to get this done. I feel very strongly about this bill and I'm glad to be a co-sponsor.

Thank you very much.

SEN. LEAHY: We'll have a bill on the floor in a few minutes and if there's any questions for any one of the three of us? Yes, sir.

Q (Off mike) -- is her nomination troubling you?

SEN. LEAHY: I wish it would it go to the floor today. As you know, some of my colleagues, my distinguished colleagues, they all are, of course, on the other side of the aisle have seemed to block just about everything. They held up for several weeks the three nominations we had on Monday. I think the most votes against one of them are four votes and it passed like 80 to 4, 88 to 2, something like this. I'm not quite sure why. Don Johnson -- we had a letter from Walter Dellinger, former head of OLC, said he thought she could be the best and would be the best -- head of OLC we've ever had.

More importantly, not only is she extraordinarily well qualified, but what is most important we've seen just in the release of these papers from OLC, we've seen what's happened. We've had unqualified people where people who are not going to follow the law at OLC. We saw the things like the -- (inaudible) -- report, John Yoo report and so on.

So I would hope she will go through. I've heard some of the very conservative commentators who seem to be in control of the Republican Party these days say she should be filibustered. I reminded them we have never filibustered nominees for the Department of Justice and I would hope that we have an up or down vote. If they want to vote against her, vote against her. Let's have an up or down vote.

The Department of Justice, the bottom line is the Department of Justice needs all the people there. They need the head of the OLC. I would hope we'd be able to get that vote up and get her confirmed.

Q (Off mike.)

SEN. LEAHY: Mortgage fraud?

Q (Off mike) -- on the interrogation side -- (inaudible) --

SEN. LEAHY: Well, it comes into several committees of jurisdiction right now. The Armed Services Committee, the Intelligence Committee and the Judiciary Committee. I think all three of these committees will look into it. I know we will continue to.

I would prefer to have an overarching commission, a non-partisan commission to look at this and for the American people to know what happened. That would require support from both parties just to get it in there. The president who seemed lukewarm -- suggested in his comments to be more agreeable to the IDI and I'll sit down and talk with him about it, but I'm not one of these who feel we should just turn the page if we haven't read the page and this is something we ought to know exactly what happened.

Who made the decision that if something comes out of the White House, you can be above the law? Who made the decision at the presidential level we should decide certain people don't have to follow the law; certain people are above the law?

Like Senator Klobuchar, I'm a former prosecutor. We always had the assumption nobody is above the law, certainly nobody in the Senate is and no president is and I want to know exactly who made the decisions. I want it public so that we won't make these mistakes again.

We did this after Watergate. We did it with -- (inaudible) -- and all these other things where journalists and anti-war protestors were being spied on and that was exposed and the law has changed as a result, FISA and other things came into being. I think the same thing can happen here.

I'm not out just to hang a lot of scalps on the wall. I want to know exactly what happened so that it won't happen again.

SEN. KAUFMAN: Can I just say something about this? I really think what the Chairman is doing here is real leadership, and this is not some kind of a witch hunt, but we all know in this room, Washington is a town of precedents and if we don't make clear that memos were written, that axes were carried out are not precedents for future generations.

You know that 20 years from now there's going to be somebody in the White House or somebody over in the Justice Department that's going to pull out one of these old memos and say, look, clearly, here's the precedent for doing what we're doing and the chairman is absolutely right. We've done this before. We did it in the Church Commission. We did it during Watergate. You go in and you say what's right, what's wrong. We're not trying to have a witch hunt, but it's really incredibly important that we make it clear to everyone in the world and for the future generations that we believe in rule of law and not a rule of men.

Q (Off mike.) Will you go ahead and investigate through regular order?

SEN. LEAHY: Yes.

Q Mr. Chairman, have you had any conversations with Chairman Conyers or Mr. Nadler or anybody of substance on this issue on the House side about possible impeachment proceedings -- (inaudible) --

SEN. LEAHY: No. For Judge Bybee -- (inaudible) -- no, I haven't. I have not. But in a way it's very clear that, certainly, neither the White House, Bush administration, nor Mr. Bybee gave us the full truth when his nomination was before the Senate. Had we been given the full truth about what he did, he never would have been confirmed by the Senate.

I think both Republicans and Democrats would have voted him down in committee; he wouldn't even come to the Senate floor. Now, it is public. I would think that the decent and honorable thing for him to do would be to resign. It's for the good of the judiciary because that's a major circuit. Everybody who comes before this thinking here we've got somebody who wrote a memo that is so contrary to the laws, the Constitution and the moral basis of our nation and are sitting there under, I feel, false pretenses and he ought to resign.

Q And he's not?

SEN. LEAHY: That's up to the House, but he ought to resign. I would hope he'd do an honest and decent thing.

Q (Off mike) -- Ninth circuit.

SEN. LEAHY: You know, what I want to do is go back and review what was said and what was in his statements when he came before us, but I do think -- certain times for the good of the nation, for the good of the judiciary, somebody does the honorable thing.

Q (Off mike) -- on fraud.

SEN. LEAHY: Thank you very much. I was just about to check my schedule and that's why we were here.

Q (Off mike.) Any potential gridlock, amendments, things like that and when do you think the final vote might be coming?

SEN. LEAHY: Well, I wish I could tell you the last one because it would be a lot easier to set my own schedule when I next go to Vermont and so forth. But I would hope it would be fairly soon. There may be amendments and that's fine. I think the best thing would be if we could do as we always used, get a time agreement, decide which amendments come up and we'll start talking today, but get a time agreement, get a time agreement on amendment. I'm perfectly willing to see amendments come up, vote them up or vote them down and vote the bill up or vote it down, but in the meantime, a lot of people are having -- are losing their homes, are losing their life savings, are being destroyed financially, sometimes mentally, we've seen suicides as some of these things have gone on.

Let's not delay. Let's give the Department of Justice the tools they need to go out and prosecute these people.

SEN. KLOBUCHAR: I just want to add to that. Our colleagues -- some of them want to hold this up, I just ask what they say to the people that lost $65 billion from Bernie Madoff. I'd ask them to look at the fact that we have given out an extraordinary amount of new contracts, government contracts with the TARP funding, with the stimulus package and just the potential there as we always know when new money goes out on the street, the potential for fraud and we want to have an equipped Justice Department, an equipped FBI for the resource intensive cases.

I would just like them to tell us how they could let this go away.

SEN. LEAHY: You know, everybody says they're against crime, here's a chance to prove it.

SEN. KAUFMAN: And the other thing is, look, the trail grows cold. These are extremely complicated cases and how we can in good conscience delay this when we know that people are covering their tracks, people are moving on. This is really, really important for the American people. There's a lot of anger out there and a lot of it is dismissed as pitchforks and things like this, but people have lost a lot, a lot, a lot, a lot in this thing and the idea that we're sitting here not operating on the thing that we can really do that everyone agrees is important to go and nail the people who committed these crimes, it's just hard to believe why there's any hold up on a bill like this.

SEN. LEAHY: And the irony is that it is a bipartisan bill and the irony is when it comes to a final vote, I want to predict, it will pass overwhelmingly. So let's get that final vote.

And one more question.

Q How do you respond to Senator Coburn's criticism that the bill creates --(inaudible) --

SEN. LEAHY: Well, of course, Senator Coburn often times takes a different view of legislation than most of his Republican or Democratic colleagues. I would point out that the Department of Justice has sent a statement saying that they really need this and strongly support it. The administration strongly supports it. The FBI came in and testified before our committee and said they need it. They strongly support it. Prosecutors associations, the various national police organizations say they support it.

I haven't found anybody who has the responsibility of actually enforcing the laws who doesn't support it and we each bring our own backgrounds in how we do these things when it comes to the Senate. My background is that of a prosecutor. I would want these tools if I was still a prosecutor, and what we've heard from every single prosecutor group that has talked about it or has opined on it, they said they want it and need it.

Thank you all very much.

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