Hon. JAMES O. EASTLAND, FEDERAL DEPOSIT INSURANCE CORPORATION, Chairman, Committee on the Judiciary, DEAR MR. CHAIRMAN: By letter dated July 18, 1969, the Corporation expressed to you its views with respect to S. 2122, 91st Congress, a bill "To amend title 18, United States Code, to prescribe the manner in which a witness in a Federal proceeding may be ordered to provide information after asserting his privilege against self-incrimination and to define the scope of the immunity to be provided such witness with respect to information provided under an order." The letter concluded with a paragraph indicating that we had been unable to obtain the views of the Bureau of the Budget with respect to the letter in time to meet your schedule. On July 22, 1969, the Bureau of the Budget telephoned to us the following advice regarding our letter: "The Bureau of the Budget has advised us that while there would be no objection to the presentation of whatever report we deemed appropriate, the enactment of legislation along the lines of S. 2122 would be in accord with the program of the President and the recommendation of the Corporation contained in its report is not consistent with S. 2122." The language quoted should be substituted for the last paragraph of the Corporation's letter of July 18, 1969. Sincerely, Hon. JAMES O. EASTLAND, K. A. RANDALL, Chairman. FEDERAL DEPOSIT INSURANCE CORPORATION, Chairman, Committee on the Judiciary, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This letter is in response to your request for the views of the Corporation on S. 2122, 91st Congress, a bill "To amend title 18, United States Code, to prescribe the manner in which a witness in a Federal proceeding may be ordered to provide information after asserting his privilege against selfincrimination and to define the scope of the immunity to be provided such witness with respect to information provided under an order." Among other things, the bill would authorize an agency of the United States (including the Federal Deposit Insurance Corporation), in the case of any individual who had been or might be called to testify or provide other information at any proceeding before it, to issue an order requiring the individual to give any testimony or provide any other information which he refused to give or provide on the basis of his privilege against self-incrimination. An agency could issue such an order only if in its judgment (1) the testimony or other information might be necessary to the public interest and (2) the individual had refused or might likely refuse to testify or provide other information on the basis of his privilege against self-incrimination. An agency could issue such an order no earlier than ten days after the day on which it served the Attorney General with notice of its intention to issue the order. Under the provisions of the bill, whenever a witness refused, on the basis of his privilege against self-incrimination, to testify or provide other information in a proceeding before an agency and the person presiding over the proceeding communicated to the witness the issuance of an order requiring the testimony or other information, the witness could not thereafter refuse to comply with the order on the basis of his privilege against self-incrimination. However, no testimony or other information compelled under the order or any information directly or indirectly derived from such testimony or other information—could be used against the witness in any criminal case except a prosecution for perjury, giving a false statement, or otherwise failing to comply with the order. These provisions of the bill would replace the last sentence of section 10(d) of the Federal Deposit Insurance Act (12 U.S.C. 1820 (d)) which currently provides that- "No person shall be excused from attending and testifying or from producing books, records, or other papers in obedience to a subpena issued [by the Board of Directors of the Corporation in connection with examinations of insured banks] on the ground that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate him or subject him to penalty or forfeiture; but no individual shall be prosecuted or subject to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he is compelled to testify or produce evidence, documentary or otherwise, after having claimed his privilege against self-incrimination, except that such individual so testifying shall not be exempt from prosecution and punishment for prejury committed in so testifying." The scope of the immunity provided witnesses in proceedings before the Corporation therefore would be converted by the bill from immunity of witnesses from prosecution for all matters related to their testimony to immunity from use of the testimony, or its fruits, against the witnesses in criminal cases. The Corporaion recommends that the specific grant of immunity contained in the fourth sentence of section 10(d) of the Federal Deposit Insurance Act be retained. As you know, one of the chief functions of the Corporation is to insure the deposits of all banks which are entitled to the benefits of deposit insurance by statutes. All banks that are members of the Federal Reserve System—including national banks chartered by the Comptroller of the Currency under Federal statutes and State-chartered banks admitted to membership in the Federal Reserve System-acquire Federal deposit insurance upon certification to the Corporation by either the Comptroller of the Currency or the Board of Governors of the Federal Reserve System. State-chartered commercial banks that are not members of the Federal Reserve System and mutual savings may become insured upon application to and approval for insurance by the Corporation's Board of Directors. In performing its insurance function, the Corporation-in cooperation with State supervisory authorities-is authorized to examine insured State banks that are not members of the Federal Reserve System. The Corporation's examiners also are authorized to make special examinations of State members banks and of national and District banks whenever in the judgment of the Board of Directors such examinations are necessary to determine the condition of such banks for insurance purposes. Through proper bank examination, the Corporation is able to determine the condition of each bank and thereby to appraise the risks being asusmed in innsuring its deposits. In making examinations of insured banks, examiners appointed by the Corporation are empowered, pursuant to section 10 (b) of the Federal Deposit Insurance Act, as amended (12 U.S.C. 1820 (b)), to make a "thorough" examination of all of the affairs of a bank and its affiliates and are directed to make a full and detailed report of the condition of the bank to the Corporation. The enactment of S. 2122 in its present form could be construed as repealing by implication the visitation powers conferred upon the Corporation by the Federal Deposit Insurance Act and could have the effect of seriously hindering the Corporation in the performance of its statutory responsibility for conducting-through its examiners a "thorough" examination of all of the affairs of a bank and its affiliates. The enactment of legislation that would convert the scope of the immunity provided witnesses in proceedings before the Corporation from immunity of witnesses from prosecution for all matters related to their testimony to immunity from use of the testimony, or its fruits, against the witnesses in criminal cases might also make it more difficult for the Corporation to obtain information from individuals that relates to the risks being assumed by the Corporation in insuring bank deposits. Moreover, in order for the Corporation properly to perform its function, it is essential that all records of a bank be immediately available to the Corporation's examiners during their regular examinations of insured State nonmember banks and that the Corporation not be required to serve the Attorney General with notice of its intention to issue an order requiring testimony or other information at least ten days before the issuance of such an order. As a matter of fact, it is the Corporation's belief that banks applying for and approved for insurance under the provisions of the Federal Deposit Insurance Act consent to making all their records available to the Corporation and its examiners and that such records are not privileged as against the Corporation. In our opinion, repeal of the specific grant of immunity contained in the fourth sentence of section 10(d) of the Federal Deposit Insurance Act would undermine to some extent the concept of examination and supervision by consent and would seriously impede the examination process. For the foregoing reasons, the Corporation recommends that section 204 of the bill be deleted. In order to conform other provisions of the bill to our suggested amendment, the proposed section 6005 (1) of title 18, United States Code, should be redrafted so as to delete the words "the Federal Deposit Insurance Corporation,". During hearings on the proposed "Financial Institutions Act of 1957," the Corporation recommended repeal of the specific grant of immunity contained in the fourth sentence of section 10 (d) of the Federal Deposit Insurance Act. A review of that recommendation in the light of more recent experience, however, suggests that retention of the specific grant of immunity contained in that sentence is desirable as a useful supervisory tool. In support of its request for retention of the specific grant of immunity contained in the fourth sentence of section 10(d) of the Federal Deposit Insurance Act, the Corporation notes that the general thrust of S. 2122 is directed at organized crime. Whenever, during the course of an examination of an insured State nonmember bank, the Corporation's examiners discover possible criminal violations, it submits reports concerning those viloations to the United States Attorney. Subsequent investigations of those violations are handled by the Department of Justice and the general immunity provision proposed by S. 2122 would apply to those investigations. We have been unable to obtain the views of the Bureau of the Budget with respect to this report in time to meet your schedule. Sincerely, K. A. RANDALL, Chairman. UNITED STATES OF AMERICA, Hon. JAMES O. EASTLAND, Chairman, Committee on the Judiciary, U.S. Senate, DEAR MR. CHAIRMAN: The Bureau of the Budget has informed the Railroad Retirement Board that there is no objection to the Board's proposed report on S. 2122, dated May 28, 1969, and enactment of legislation along the lines of S. 2122 would be in accord with the program of the President. Sincerely yours, HOWARD W. HABERMEYER, Chairman. UNITED STATES OF AMERICA, Hon. JAMES O. EASTLAND, Chairman, Committee on the Judiciary, U.S. Senate, DEAR MR. CHAIRMAN: This is the report of the Railroad Retirement Board on S. 2122 which was introduced May 12, 1969, by Senator McClellan (for himself, Senator Ervin, and Senator Hruska). The bill adds a new part, part V, entitled "Immunity of Witnesses", to title 18 of United States Code and also modifies other provisions of the Federal law to conform to the new part added to title 18. Part V of title 18 of the United States Code would contain five sections. Under section 6001, a witness would not be permitted to refuse to testify on the grounds of self-incrimination in a proceeding before a court, grand jury, or agency of the United States, either House of Congress, a committee of either House, or a joint committee, if the person presiding over the proceeding communicates an order issued under this law. But no testimony or other information (or any information directly or indirectly derived from it) so compelled could be used against the witness in any criminal case except for perjury, false statement, or refusal to testify. Section 6002 indicates how the procedure would be invoked in connection with a proceeding before the United States court or grand jury. Section 6003 relates to "Certain Administrative Proceedings". If, with respect to any proceeding, an agency (as defined in section 6005) believes that testimony or other information is necessary to the public interest and that an individual has or is likely to refuse to testify or provide such information on the basis of his privilege against self-incrimination, the agency may issue an order 10 days after the day on which it served the Attorney General notice of its intention to do so requiring the individual who has been or may be called to give any testimony or provide any information which he refuses to give or provide on the basis of his privilege against self-incrimination. Section 6004 relates to "Congressonal Proceedings". Section 6005 is a "Definition" section. "Agency of the United States" includes the Railroad Retirement Board, which is specifically listed along with other qualifying agencies. The term "proceeding before any agency of the United States" means any proceeding before any agency with respect to which it is authorized to issue subpoenas and to take testimony of witnesses under oath. Section 228 of the bill (page 11) repeals subsection 12(c) (45 U.S.C. § 362 (c)) of the Railroad Unemployment Insurance Act. In this connection, the succeeding subsections of Section 12 should be redesignated and a conforming change made in the references to subsections of Section 12 which appear in Section 10 (b) (6) of the Railroad Retirement Act. It is not clear what authority, if any, the Board has under Section 10 of the Railroad Retirement Act to compel testimony when a witness refuses to answer on the basis of the privilege against self-incrimination. Section 12 of the Railroad Unemployment Insurance Act permits the Board to compel testimony or the production of documentary information with respect to that Act, and the witness may not refuse since he is offered immunity from prosecution by Section 12(c) for any testimony he gives or other information he provides. Under the proposed legislation, the Board could compel testimony, and the immunity prescribed would be granted to the witness, with respect to both Acts administered by the Board. At present, under subsections (a), (b), and (c) of Section 12 of the Railroad Unemployment Insurance Act, the Board may solicit testimony and the witness is automatically precluded from refusing to answer. Section 12 (c) grants immunity, and the Board is not required to take any positive steps beyond issuing the subpoenas and soliciting the desired information to compel testimony through use of the immunity provision. If the witness does not offer to answer or produce the required evidence, the Board may then request an order from the district court to compel testimony under threat of contempt. Under the proposed new law, the immunity provision is not automatic. If a witness has refused or is likely to refuse to give testimony or provide other information, the Board must make a judgment that the information is necessary to the public interest, and the Board must also notify the Attorney General at least 10 days in advance of its intention to issue an order to compel testimony. The Board may then issue an order to compel the testimony. Immunity is extended and the witness must answer when the order is communicated to him. Until the Board does issue the order, apparently, the witness could stand upon his refusal to testify on the basis of the privilege against self-incrimination and immunity cannot be extended to him. The scope of the information which may properly be elicited under the proposed law is slightly different than under Section 12 of the Railroad Unemployment Insurance Act. Under Section 12, the investigation or proceeding at which information is sought must be relative to a determination of a right to benefits, or relative to any other matter within the jurisdiction of the Board under the Railroad Unemployment Insurance Act; and, the information must relate to the matter under investigation or in question before the Board. Under the proposed new law, the test for information or other material which may be sought is testimony or other information which "may be necessary to the public interest". This language seems to be somewhat less relevant to the function of the Railroad Retirement Board, although there would probably be no difficulty in establishing that the information necessary to a determination of benefit rights of one or two people is in the public interest. The scope of immunity is much narrower under the proposed law than under Section 12 of the Railroad Unemployment Insurance Act. Under Section 12, the immunity is from prosecution or subjection to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which the witness is compelled to testify. Under the proposed new law, the immunity would be from use of the information (or any information directly or indirectly derived from the testimony or other information) against the witness in any criminal case. |