LEGAL AND MONETARY AFFAIRS SUBCOMMITTEE

1. Department of Justice, Bureau of Prisons-Freedom of Informa

tion.

(a) Summary.-Investigation into complaints of refusal to disclose information pertaining to transfers of prisoners by Bureau of Prisons. contrary to Freedom of Information Act. Assurance was obtained that the pertinent information would be given to requesters and attorneys without restriction. The documents are not issued individually to prisoners, although they are made available to inmates for their information at each institution.

(b) Benefits. This investigation served to assure that the Bureau of Prisons adhered to the requirements of the Public Information Act with respect to matters essential to prisoners and their attorneys.

2. Federal Reserve Board-Safekeeping of Treasury Bills.

(a) Summary.-Inquiry into whether the Federal Reserve Board should provide purchasers of small Treasury bills with safekeeping of the bills as it does for its member banks. It was developed through this inquiry that commercial banks, which handle such sales to small investors, are willing to hold bills in safekeeping for the accounts of the purchasers. On the basis of its experience in safekeeping savings bonds the Federal Reserve Board found the cost of such service prohibitive in relation to the small demand.

(b) Benefits. This study satisfied the committee on the existence of adequate safekeeping services by commercial banks, and that this is an area into which the Federal Reserve Board probably should not

enter.

3. Federal Bank Supervisory Agencies-Bank Protection Act.

(a) Summary.-Inquiry into the possibility of having additional radio wavelengths made available by Federal Communications Commission for law enforcement use in aid of bank protection. Assurances were received from the FCC that it is aware of the need and is actively taking steps to provide additional frequencies for police and other public safety uses.

(b) Benefits. The bank robbery problem is one which the subcommittee has had under continuing study. The use of unused TV channels and other frequencies to ease problems of detection and apprehension in major metropolitan areas will considerably aid police and make most economical use of existing facilities.

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4. Department of Justice, HEW-Fort Worth Clinical Research Center.

(a) Summary.-Investigation into the effect that the announced closing of Health, Education, and Welfare's Fort Worth Clinical Research Center might have upon the Nation's drug problems and upon law enforcement efforts. After raising the problem with the Attorney General, he advised the subcommittee that he recognized a present need for the facility. The Secretary of Health, Education, and Welfare thereupon withdrew his recommendation. The facility will be kept open for an indefinite period pending the development of community facilities.

(b) Benefits.-Only two Federal facilities deal with problems of drug abuse and addicts. Continuation of the Fort Worth Clinical Research Center obviates the expenditure of funds for the transfer of inmates to other Federal institutions. It also assures a Federal treatment and rehabilitation center in the southwest area of the country.

5. Federal Reserve Board, Comptroller of the Currency, Federal Deposit Insurance Corporations, Securities and Exchange Commission-Unregulated Lenders.

(a) Summary.-Investigation to determine if bank supervisory agencies attempt to ascertain evasions of margin requirements by banks in participation with unregulated lenders who were not affected by margin requirements. Investigation showed that bank examinations failed to disclose any substantial activity of banks in aid of unregulated lenders in avoiding margin requirements. The Federal Reserve Board has issued regulations tightening use of credit in stock transactions by unregulated lenders.

(b) Benefits. This investigation served to show the need for further changes in Federal Reserve regulations regarding margin requirements.

6. U.S. Treasury, Internal Revenue Service-Income Tax Forms. (a) Summary.-Inquiry into the initiation of new IRS forms for reporting and paying income and estimated taxes. The inquiry determined that the new forms were issued after considerable study by the Internal Revenue Service.

(b) Benefits.-The subcommittee has a continuing interest in achieving simplicity in IRS forms and procedures. New forms and procedures have been instituted by IRS, including expanded tax advice assistance to small taxpayers.

7. U.S. Treasury-Social Security Investment Plans.

(a) Summary.-Inquiry into complaint that Social Security funds have been used by the Treasury as a "cheap-money slush fund" for the Government.

(b) Benefits. The study disproved the allegation developing that as managing trustee of the trust funds Treasury invests the Social Security's funds at currently prevailing market interest rates as required by law.

8. U.S. Treasury, Internal Revenue Service-Self-Employment Tax Reporting System.

(a) Summary.-Investigation into manner in which the Internal Revenue Service reports receipts of self-employment taxes to the Social Security Administration to insure accurate reporting and crediting of accounts. Since the inquiry began the Internal Revenue Service has changed its procedures to recording self-employment data on magnetic tape, for use by both the Internal Revenue Service and the Social Security Administration.

(b) Benefits. The inquiry produced substantial information regarding the deficiencies in the former reporting system. The new reporting system operated jointly by the two agencies provides greater assurance that self-employment taxes are properly credited.

9. U.S. Treasury, Internal Revenue Service-Highway Use Tax. (a) Summary.-Inquiry into indications of the possibility that the Government was being deprived of millions of dollars a year through IRS practices in inadequately collecting highway use taxes, principally by failing to issue schedules of use taxes for the heavier weight trucks. New IRS regulations have revised the highway use tax schedules.

(b) Benefits.-Approximately $4 million a year in additional highway use taxes should be collected this year. In years to come, as the number of vehicles increases savings will correspondingly increase.

10. Department of Justice-Time Recording System.

(a) Summary.-Inquiry into the economy and efficiency of a new time recording system installed by the Department of Justice for its attorneys, and whether adequate study preceded adoption of the system. The inquiry disclosed that a management analysis and other studies preceded preparation of this system; that it had had a "trial run" in offices of several U.S. attorneys; that it was not wasteful of the attorney's time and should lead to more economical and effective operations; and that it would be adapted to the specific requirements of particular divisions of the Department, based upon current studies before it is actually put into overall effect.

(b) Benefits.-Inquiry revealed that, contrary to complaints, the system was not wasteful, and was based upon studies that indicated that it could lead to more economical and effective operations within the Department. The system has not been implemented on a department wide basis.

11. Department of Justice-Dismissal of Antitrust Suit.

(a) Summary.-Inquiry into a published complaint that the Attorney General had dismissed an antitrust suit against a pipeline client of his former law firm. Investigation produced the assurances of the Solicitor General of the United States that it was he, and not the Attorney General, who decided to dismiss the case; that it was done on the merits; that he had no communication with the Attorney

General about the matter prior to its dismissal; and that the action was taken before the Attorney General took office.

(b) Benefits.-The inquiry disclosed the facts surrounding the dismissal and developed assurances that the dismissal was not motivated by personal interests.

12. Department of Justice, Department of State, U.S. Coast Guard, Bureau of Customs-Cuban Terrorists.

(a) Summary.-Inquiry into agency actions regarding terrorist activities by a group of Cuban extremists who endangered American lives and property by bombings and other acts of terror against foreign ships and businesses.

(b) Benefits.-The inquiry disclosed that precautions were being taken to prevent such conduct and to apprehend and prosecute the persons involved.

13. Federal Deposit Insurance Corporation-Suspension of Bank Directors for Violating State Laws.

(a) Summary.-Inquiry into supervisory responsibility of FDIC with regard to a director of a State bank insured by FDIC who was indicted in State proceedings, where statute authorizes FDIC to suspend a director who is charged in any "information, indictment, or complaint authorized by a U.S. attorney***”

(b) Benefits. An opinion of FDIC Legal Division was issued to the effect that the FDIC has authority to suspend bank directors based upon indictments or informations against them in State courts. The study resulted in clarification of the law applicable in such situations.

14. Customs Bureau-Port Clearance.

(a) Summary.-This study was based on complaints concerning delays in Customs clearance of cruise ship passengers returning to the Miami port. As a result of this study, Customs took steps to correct the problems, assigning additional inspectors to accommodate the heavy tourist schedule.

(b) Benefits.-Customs is faced with the problem of increased tourism and changes in preferred ports of entry on the one hand, and the practical difficulties of rapidly clearing passengers on the other. The action here taken added to the comfort and convenience of passengers and efficiency of the Customs operations.

15. Treasury Department-Tax Benefits of U.S. Military Personnel in Cambodia.

(a) Summary.-Inquiry into the tax status of Americans serving in Cambodia and the fact that they are not receiving the same special tax benefits which accrue from serving in Vietnam.

(b) Benefits.-Subsequent to action taken by this subcommittee the Treasury Department published a notice of proposed rulemaking which will permit uniform tax benefits to include military personnel in combat areas of Cambodia.

16. Federal Bureau of Investigation-Fingerprint Identification Services.

(a) Summary. An inquiry into the Bureau's proposal to curtail fingerprint processing services to certain fingerprint contributors other than for Government use. This service, in the past, has been used by State and local agencies which require fingerprint checks and which would have no central source to check for past criminal records if this service were closed to them.

(b) Benefits. The study resulted in the FBI's reinstating this service as of July 1, 1970.

17. Treasury Department-Savings Stamps Program.

(a) Summary-Study into the proposed discontinuance of the United States Savings Stamps programs. The investigation showed that the unmeasured costs, particularly within school systems, in maintaining this program have resulted in considerable losses, as a sizable portion of these stamps are lost or destroyed before being exchanged for interest-bearing savings bonds.

(b) Benefits. The study revealed that the cost to the Government in maintaining this program out weighed its benefits, and that the resources devoted to the program could be more effectively used elsewhere. Thus, there will be a savings to the Treasury of approximately $800,000 a year.

18. Federal Reserve System-Debt Rate Obligations.

(a) Summary.-Inquiry into sales by banking institutions of debt certificates on notes as possible evasions of the Federal Reserve regulation Q which establishes interest rates payable on deposits.

(b) Benefits.--The inquiry produced assurances from the Federal Reserve Board and the Federal Deposit Insurance Corporation that this situation would be controlled. Regulations to prevent evasions of regulation Q took effect June 30, 1970.

19. Federal Reserve Board-Eurodollars.

(a) Summary.-Inquiry into the Federal Reserve Board's action to subject Eurodollars to reserve requirements based on a marked increase in Eurodollar holdings by U.S. residents.

(b) Benefits.-The Federal Reserve Board has effectuated reserve requirements and has requested U.S. banks to discourage placement of deposits abroad by U.S. residents.