S&L-FRAUD FIGHT CALLED INADEQUATE

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, February 6, 1993                   TAG: 9302060113
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-1   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium
S&L-FRAUD FIGHT CALLED INADEQUATE
The Bush administration fell short of its promised effort to combat the multibillion-dollar fraud that led to the collapse of banks and thrifts nationwide, congressional investigators asserted Friday.
The General Accounting Office said President Bush's Justice Department treated the bank fraud debacle like "other enforcement matters," and allowed bureaucratic turf battles to prevent a coordinated attack.
"Justice did not do all it could with the authority it has to strengthen the government's financial-institution-fraud program," said the GAO report, obtained by The Associated Press.
In particular, the GAO said that while the department has won convictions in 95 percent of the cases it has brought, it created just two of the 26 special task forces former Attorney General Dick Thornburgh had promised to step up prosecution. The government has also managed to collect just 4.5 percent of the $846 million in fines and judgments imposed in fraud cases, the report noted.
The GAO, Congress' investigative arm, said the strongest effort made by the Bush administration was the creation of a special prosecutor's office to handle the burgeoning crisis, but even that lacked the resources and authority to adequately address the issue.
"The special counsel cannot ensure . . . adequate resources are available to investigate and prosecute financial institution fraud, in part because the U.S. attorneys exercise great discretion in managing their own enforcement programs and resources," the report said.
Nearly 2,800 banks and thrifts failed from 1981 to 1992, and more than 72 percent of those failures have come since 1987. Losses from thrift failures alone could cost taxpayers more than $300 billion over the next 40 years.
Thornburgh acknowledged Friday that the task force concept "waxed and waned" without ever really getting off the ground. But he blamed Congress for moving too slowly in providing money for the plan.
One of his deputies assailed the GAO report in a 19-page written response. "The determination to criticize rather than analyze is evident throughout," wrote Assistant Attorney General Lee Rawls, who is still at the department. "In short, the report is wrong in so many ways that it must be assumed that the inaccuracies are intentional."
The report did note that the department's fraud caseload has increased, and it has hired more prosecutors to work on fraud cases.

by Archana Subramaniam by CNB