which these bills, S. 3814 and S. 3828, pose to effective law enforcement and the state of American law on these questions.

I suggest, however, that before action is taken on these two bills, that the Federal Trade Commission, the Securities and Exchange Commission, and representatives of State and local enforcement agencies all be afforded an opportunity to present their views on S. 3814 and S. 3828 to this subcommittee.

On behalf of the Department of Justice, I emphatically recommend that S. 3814 and S. 3828 be rejected in toto by this subcommittee.

I have given Senator Bennett, Senator Tunney, several concreate examples of how these bills would hamper law enforcement. There are a number of others I can and would supply if so requested.

Senator BENNETT. Thank you very much. I am looking in your statement where you list other types of records which the Government requires purveyors to maintain.

Would it be logical to assume that if we adopt the theory behind this proposed legislation, these purveyors would then have a basis to refuse to give back to the Government the very information that the Government requires it to keep.

Mr. LYNCH. Pursued to the logical conclusion that concept would, Senator, it also would affect the ability of law enforcement officials to gain the cooperation of law-abiding citizens in the course of official investigations.

The law enforcement community, not just Federal, but State and local, depends enormously on the willingness of citizens to assist them in the course of criminal investigations.

If this concept is carried through to financial records why not to brokerage records, and brokerage houses, why not to commercial establishments, why not to retail and wholesale outlets. All of these records may, in a particular instance, be the subject of an inquiry by a law enforcement official seeking the information in their records in the course of an official investigation.

Senator BENNETT. I note that you suggest these other agencies that might be called in. I am sorry the chairman of the committee has left, but for the record I will suggest that before we finally finish our work on this bill we should hear from the SEC and the FTC.

Mr. LYNCH. If I may, I received a letter this morning from the chairman of the SEC, Mr. Casey. This expresses his views on these two bills. I would like to make it part of the subcommittee record if I may. Senator BENNETT. Without objection it will be received and included.

Mr. LYNCH. It is rather lengthy, so unless you would like me to, I would not read it.

Senator BENNETT. We will put it in the record (see p. 122).
Senator Tunney, I will be glad to yield to you for 10 minutes.
Senator TUNNEY. Thank you, Mr. Chairman.

Mr. Lynch, have you read the Tunney bill and Mathias bill?

Mr. LYNCH. I think I have.

Senator TUNNEY. You have lumped the two bills together throughout the course of your testimony and, as you know, there are very substantial differences?

Mr. LYNCH. Yes, sir.

Senator TUNNEY. To read your testimony, one would not know it. What are the major differences between my bill and the Mathias bill? Mr. LYNCH. Your bill, Senator, does not really relate to the recordkeeping provisions contained in 91-508, as I recall. Senator Mathias' bill would have in effect, repealed the title I and I am not sure whether title II of 91-508.

Senator TUNNEY. That is correct.

Mr. LYNCH. Senator Mathias' bill provides for acquisition of financial records on two bases, one is the consent, elaborated on in detail in the bill; and second is on a showing of probable cause with the additional proviso that after a showing of probable cause, there would be a 21-day period before these records were produced.

Senator TUNNEY. That is right.

Mr. LYNCH. Your bill provides that a summons or subpena as I recall which is

Senator TUNNEY. Consented to or

Mr. LYNCH. Or by subpena, notification of which is given to the individual who may be the subject, the account holder, or the customer. Senator TUNNEY. Yes.

Mr. LYNCH. And you provide here that, "or by a hearing."

Senator TUNNEY. I just want to point out records are available pursuant to an administrative subpena in my bill and if the court decides to issue that

Mr. LYNCH. Not without notification.

Senator TUNNEY. Yes, that is right, with notification. But, there can be an administrative subpena and the records can be made available by the court pursuant to a search warrant after a showing of probable cause.

Mr. LYNCH. But, without notification, Senator, you could get those records only on a showing of probable cause. These records, as Public Law 91-508 indicates in the expressed intent of Congress are useful in criminal investigations, tax, and other regulatory proceedings.

These records are often acquired and used in the course of the initial steps of an investigation and are often vital in the initial steps of an investigation at a point when you do not have probable cause meeting the due process requirements of the fourth amendment as spelled out by Spinelli and Harris, and the other cases in the U.S. Supreme Court. Senator TUNNEY. As I understand your testimony, you feel it should be possible for a Federal agency to keep a bank account under secret surveillance in an ongoing basis?

Mr. LYNCH. No, your honor-this is a forum I am not used to.
Senator BENNETT. We still call ourselves honorable.

Senator TUNNEY. Occasionally.

Mr. LYNCH. I am more used to addressing the interrogator as "Your Honor." Senator, I think you misunderstood the thrust of what I say. In criminal investigations, not only is it useful but it is sometimes essential that an account record be obtained-financial records, but also other third-party records. They are looked at, inspected, et cetera, et cetera, in the course of this particular investigation.

I might point out, Senator, that as I read your bill, and indeed as Senator Mathias' bill outlines, if a conscientious bank clerk were to observe a check-kiting scheme in the bank and were to report it to the

Federal authorities as ordinarily they do in order to prevent massive losses by fraud, it would seem to be a violation of this statute and could subject not only the teller but the Federal agent who received the information to criminal penalties.

Senator TUNNEY. Oh, come on.

Mr. LYNCH. You tell me where it does not apply

Senator TUNNEY. You show me where it does apply. You are the one that has made that charge.

Mr. LYNCH. Because it says "no records may be furnished, save-" and then it talks about the issuance of a subpena or probable cause.

If a banker is aware of an ongoing fraud in an account holder's account I do not see any provision of this statute that would apply to permit the conveying of that information to the appropriate Federal authorities.

And that means that you would effectively void the fraud by wire, fraud by mail involving banks, and several other statutes. Bank embezzlement and others.

Senator TUNNEY. If that is the case we will amend it. Can you tell me whether the FBI has ever obtained copies of an individual's bank records from a bank without a subpena or warrant?

Mr. LYNCH. Obtain copies? They usually-for instance, a particular situation that I can think of, they might, for instance, in a complaint of check fraud, or a kiting operation; a mail fraud, or fraud by wire, a complaint by the bank they would inspect those records.

If those records were going to be required for a criminal proceeding. they would ordinarily be obtained by grand jury subpena, or by a trial subpena.

Senator TUNNEY. How frequent is that practice?

Mr. LYNCH. Well, in certain types of investigations, I would say in bank frauds, and bank check-kiting investigations, I would say it would occur with some degree of frequency.

Senator TUNNEY. What other types of investigations?

Mr. LYNCH. Well, another matter that was brought to my attention was in a situation where a bank robber was a fugitive and information was obtained that the bank robber had a fictitious account in a particular bank. They went to the bank and explained their interest in the investigation and asked the bank to inform them if they received a check drawn on the account.

They did receive a check from Chicago drawn to a particular person. They went to that person and through that lead obtained custody of the fugitive after several months of fugitive status. The fugitive in the meantime had committed a number of additional robberies. Senator TUNNEY. How about internal security cases?

Mr. LYNCH. In internal security, I think I have given an example by the espionage example I gave. In that particularSenator TUNNEY. Political surveillance cases?

Mr. LYNCH. I do not know what you mean by that.

The FBI ordinarily investigates violations of criminal statutes. That is their duty. I do not know of any "political surveillance" situation.

Senator TUNNEY. You are saying the FBI ordinarily investigates only violations of a specific statute?

Mr. LYNCH. That is correct, Senator.

Senator TUNNEY. How cooperative have banks been in supplying information?

Mr. LYNCH. I think in particular situations they have been reasonably cooperative. I know or I have heard of situations where the bank did not want to furnish a particular record. Or where maybe the urgency was not as great. I should not say furnish; I should say permit the FBI to inspect.

I would assume in that case if it were important to the investigation, it would then come to the U.S. attorney's office or the Justice Department and a grand jury subpena would issue.

Senator TUNNEY. Would you favor prohibiting release of bank information unless a subpena were issued?

Mr. LYNCH. I am not aware that bankers have abused their customers' confidentiality. I should not say confidentiality because I am not sure there is a confidential relationship between the bank and customer. But I am not aware that, for instance bankers have given the public media or noninterested third parties information to such an extent that abuses exist that may require the banking people to be faced with some legislation of this sort. I would have to see the specific legislation.

Senator TUNNEY. As I understand the answer to my question, you feel they ought to be able to make that information available to agencies without a subpena or warrant?

Mr. LYNCH. Yes.

Senator TUNNEY. Under what kind of control do you think there. should be, if any? Any control at all?

Mr. LYNCH. There should be-there is control by—

Senator TUNNEY. Control by law.

Mr. LYNCH. In the acquisition of records, the control is usually when the subpena issues if somebody raises a question

Senator BENNETT. May I interrupt at this point.

Are we talking about two different things? As I understand your testimony, you are talking about the rights of the Government to inspect the records; and are you talking about the right to obtain the records?

Mr. LYNCH. Yes; I do not think

Senator TUNNEY. To inspect and gain information from the records. Mr. LYNCH. I think your question is, do I think that they should have the right in certain criminal investigations to

Senator TUNNEY. No, no; the question is: Do you feel that there ought to be any controls whatsoever in law involved with the ability of the Federal agency to inspect the bank records of an account holder?

Mr. LYNCH. I am not aware, Senator, that there have been any widespread or even serious abuses that would warrant legislation in this particular area.

Senator TUNNEY. So, there should not be any controls?

Mr. LYNCH. I am aware of nothing that would be a legislative underpinning in the balancing process to require such legislation.

Senator TUNNEY. So, in other words, as I understand your testimony, a person's banking records should be made available to any Federal agency that requests them without any prohibitions whatsoever on the ability of the Federal agency to investigate those records?

Mr. LYNCH. Well, I would assume that we are talking about a-
Senator TUNNEY. Yes or no; can you answer that yes or no?

Mr. LYNCH. It is very difficult to answer that yes or no, Senator, because I think it is sort of pitched to a certain extent to a specific argument.

But I would like to point out that a bank manager will ordinarily have a reasonable degree of responsibility in taking care of the records under his custody, the bank records under his custody.

The FBI agent, let us take that, who goes to a bank manager on a specific investigation and says he needs the information from the bank records will, of course, be dealing with a responsible banking official and

Senator TUNNEY. Most bank managers are very responsible.

Mr. LYNCH. And I don't know of any abuses between those two officials; I do not know of any situation that would require or warrant legislation.

Senator TUNNEY. So, you do not feel that there should be any controls at all on the ability of a bank manager in his own discretionMr. LYNCH. I think there are inherent controls in that situation. Senator TUNNEY. The conscience of the bank manager?

Mr. LYNCH. And the responsibility of the bank manager and the conscience of the investigating agent.

Senator TUNNEY. My 10 minutes are up.

Senator BENNETT. I would like to pursue this question from a slightly different point of view.

I am not a lawyer so that lets me out of any responsibility for the answer that I hope you can give us.

If a bank manager releases or permits a Federal agency to have access to the records of an individual and the individual thereafter suffers false arrest or other conditions, can the bank manager be held civilly liable for damages?

Mr. LYNCH. I wish I could answer that question, Senator; I do not know off the top of my head. I assume there would be a cause of action there.

Senator BENNETT. That is one control on the bank manager if that is true.

I would think if that is true, he would be very careful because he could be civilly liable for damages.

Senator TUNNEY. Mr. Chairman, I do not know the answer to that question either, but if you follow the logic of the witness, there would be no civil liability because the bank records are not private matters; they are the property of the bank.

Mr. LYNCH. That is correct, and the courts have stated that.

Senator TUNNEY. If that is in fact the law, then the account holder has no cause of action.

Senator BENNETT. If I used my automobile which is my property to damage another individual, I am subject to civil penalties. Could you get the answer to that question for us?

Mr. LYNCH. I think we can.

Senator BENNETT. And submit that?

Mr. LYNCH. Yes, sir; yes, sir. (See p. 128.)
Senator BENNETT. Thank you very much.