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to the Criminal Division of my office, and they heartily concur in the recommendation of General Meyer.

I am sorry that we are unable to take a more definitive
position as an Association, but if these matters are
still pending in the Congress in December, I am sure that
our Criminal Law Committee will make a proper recommenda-
tion to the Association as a whole, and we will act thereupon.
I hope that what opinion is made available to you in the in-
terim will be helpful to the deliberations of your Committee.

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STATEMENT OF HOWARD W. CANNON, U.S. SENATOR FROM THE STATE OF NEVADA

Mr. Chairman, I am pleased to speak in favor of S. 3814, the “Financial Records Privacy Act," which I am co-sponsoring with Senators Tunney and Brock. I have received numerous letters from my Nevada constituents objecting to new Treasury Department regulations pertaining to bank record keeping for government investigations. I feel that s. 3814 will respond to the many worried questions being addressed to our nation's lawmakers about the privacy of a citizen's personal financial affairs.

Recently, we have seen a number of newspaper articles detailing how government agencies are already conducting "fishing expeditions” through citizens checking and other financial records, without ever informing the individuals what they are doing. However, Treasury Department regulations published March 31, 1972 pursuant to a broad interpretation of PL 91-508 (“The Bank Secrecy Act") will only make such explorations much easier, and therefore. probably more widespread. Although we passed the Bank Secrecy Act intending to help fight organized crime and its secret Swiss bank accounts, the administration seems to have set upon this law as a means to opening up broad new investigatory powers over the average citizen.

In response to my inquiry, Treasury General Council, Samuel R. Pierce, Jr.. defended the new regulations, stating that the only effect would be to extend the time that records must be kept, since most banks already maintain microfilm of their checks. In my opinion, this answer begs the question being asked by my constituents, who want to know why the government can secretly make large scale investigations of their private financial affairs. For example, Mr. W. R. Wentworth of Reno writes me, “These regulations give the various Federal agencies far too great a power without responsibility and control. 'Big Brother's encroachment has advanced too far already considering the story of the California man's bank account and the FBI."

Steven R. Brown, also of Reno, comments, “The Bank Secrecy Act is a blatant invasion of individual privacy by the government. I trust that your bill will rectify the situation."

William H. Hernstadt, President of Nevada Independent Broadcasting corporation in Henderson makes a number of salient observations on the new reporting regulations :

*This act is a gross invasion of privacy allowing the Treasury Department to have full access to every person's banking information in the country without a subpoena or a search warrant. In the case of criminal fraud, both the Treasury Department and the Internal Revenue Service have adequate ways to subpoena any and all records they may need to prosecute a case.

“Currency exchange control is the ear mark of a dictatorship and it is utter hypocrisy that Congress passed this law as an addendum to the credit reporting provisions of Title 1 of the act. Two things that citizens guard most carefully are their private lives and their financial affairs. Fortunately, the Supreme Court has stricken the bugging provisions that Congress gave the President recently. I would hope that you did not wait until the Supreme Court rules on this act and seek its repeal as a gross violation of this country's citizens."

The Financial Records Privacy Act will not curtail any federal investigation of financial transactions when probable cause has been shown and the Constitutional procedures of the 4th Amendment followed. Our government will remain free to root out organized crime, to move against secret overseas bank accounts, and to clamp down against illegal income tax evaders.

What our bill will do, however, is to stop unwarranted random investigations of our private finances when the administration has no reason to believe a crime has been committed. Secret police style investigations are alien to any free society, but especially in the United States where our Declaration of Independence revolts against an “arbitrary government," and our Constitution protects "the right of the people to be secure in their persons, houses, papers and effects against unreasonable searches and seizures."

Under the safeguards instituted by S. 3814, a bank may open its records only when the account holder has given his permission in writting, when he has been notified by registered mail or subpenoa and given 15 days to react, or when a court order has been given. Although these restrictions to unlimited government power may delay some investigations a week or two. I for one feel that a few days delay in apprehending the guilty is worth the assurance that every citizen will not be subjected to unbridled government snooping.

A court injunction has delayed implementation of the Treasury Department's dangerous new regulations. I strongly urge this subcommittee to complete action on S. 3814 and bring it to a Senate vote so we may write these safeguards into law before the regulations are effected.

U.S. SENATE,
COMMITTEE ON THE JUDICIARY,

Washington, D.C., September 8, 1972.
Senator WILLIAM PROXMIRE,
Chairman, Subcommittee on Financial Institutions,
Washington, D.C.

DEAR SENATOR : Enclosed for your information are copies of two letters, one dated September 5, 1972 from Mr. Walter E. Nolte of the First National Bank of Lincoln to me; and the other dated August 28, 1972 from Honorable Clarence Meyer, Attorney General of Nebraska to the President of the National Association of Attorneys General. They relate to the bills S. 3814 and S. 3828, on the subject of secrecy of bank records. I ask that they be printed in the record of the hearings on these bills.

These letters point out that enactment of either of the two bills would seriously interfere with the cooperation given by banks to law enforcement agencies, and thus perhaps hamper the enforcement of laws against crimes such as fraud. I ask that the letters be made part of the record of the hearings on these bills. With kind regards, Sincerely,

ROMAN L. HRUSKA,
U.S. Senator, Nebraska.

FIRST NATIONAL BANK LINCOLN,

September 5, 1972. Hon. ROMAN HRUSKA, U.S. Senator, Washington, D.C.

DEAR SENATOR HRUSKA: I am writing with respect to Senate Bill #3828 and Senate Bill #3814. These bills are under consideration by a sub-committee of which Senator Proxmire is chairman.

Sir, without unduly adding to the file which you may have on this, I think I may best give my comments to you by referring to the letter of August 28 written by Clarence Meyers, Nebraska Attorney General.

I was formerly Deputy Attorney General of Nebraska, and am now, as you know, in commercial banking. His remarks seem most appropriate to me from either point of view.

If a bank is not to be able to divulge transactions had with it by individuals which result in the bank's being defrauded, a definite slowdown in the practices of banks would occur. We bankers would not be able to assist many depositors in obtaining early use of deposited funds until the checks or items deposited with us were absolutely and fully collected. This would often defer credit for an intolerable amount of time.

Surely a more careful selection of words could be made and a more deliberately studied bill could be drawn which might accomplish the fiduciary protection which the bill seeks without tying the hands of the local prosecuting offices.

I am attaching a copy of the Clarence Meyer letter to which I refer in the event yours has become separated at this point of time. Sincerely yours,

WALTER E. NOLTE, Executive Vice President.

STATE OF NEBRASKA,
DEPARTMENT OF JUSTICE,

Lincoln, Nebr., August 28, 1972.
Hon. Gary K. NELSON,
President, National Association of Attorneys General,
Phoenix, Ariz.

DEAR GARY: This letter is in response to the August 24 memorandum from the Secretary of our Association, Mr. John K. Hickey, in which he advised that

on the first set of proposed regulations that appeared in the Federal

Register for June 10, 1971.

We respectfully invite the attention of the Subcommittee to

those objections, none of which was remedied in the regulations as

promulgated.

Inappropriate Format of Regulations

Our June 24, 1971 letter urged that the regulations include

savings and loan associations only with respect to the particular functions

they perform that are covered by the spirit of the statute, rather than

lumping such associations indiscriminately with "banks" by definition as

[blocks in formation]

"The role played by savings and loan associations in

situations that apparently led to enactment of Public

Law 91-508 was peripheral.

Even the style of the statute

carries out that theme. For while going into detail about

record retention requirements for FDIC-insured banks in

a new section 21 added to the Federal Deposit Insurance

Act by section 101 of P. L. 91-508, almost as an afterthought,

the provisions of new section 21 are incorporated by reference

into the field of savings and loan legislation by the addition of

short section 411 to the National Housing Act by section 102

of P. L. 91-508.

"Speaking of section 411 and FSLIC-insured institutions,

the report of the House Committee on Banking and

Currency on H. R. 15073 (House Report No. 91-975,

March 28, 1970, page 18) acknowledges that the

'recordkeeping requirements with respect to

demand deposit account activity would have

little or no application to such institutions, as

they do not offer demand deposit services. To

the extent, however, that such services might

be or become available, they should be covered.

Also, records of the identity of customers of

these institutions are desirable to virtually the

same extent as records of the identity of bank

customers.'

As far as we are aware, no savings and loan association

offers demand deposit services, although many would like to

have authority to do so.

Unless and until they do, however, it

seems inappropriate to draft regulations that speak as if savings

and loan associations have authority to handle demand deposits."

Unwarranted Penalties

The National League's June 24, 1971 letter of comment also urged

the Treasury Department to state separately in the regulations those

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