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Mr. KANJORSKI. Certainly.

Mr. ANNUNZIO. In your briefings to the staff, when you briefed the staff, you said at that briefing that you were going to supply the committee with all the information on these briefs. Now, w has happened since you told the staff you were going to supply the information of the briefings to the committee?

Mr. HERSHKOWITZ. I have received different instructions.

Mr. ANNUNZIO. You received different instructions. In other words, somebody is interfering with this hearing?

Mr. HERSHKOWITZ. I received different instructions. If you believe that is interference, that is interference.

The CHAIRMAN. If the gentleman will yield to me, I don't think it is quite fair to the witness. The gentleman has suggested that we pursue this. Well, the chief counsel under whose direction bes acting is here. If he is willing, we would bring him forth and have him give the administrative reasons which to a certain extent we do expect.

Mr. KANJORSKI. And Mr. Chairman, the name of the individual in the Justice Department that is carrying on this activity.

The CHAIRMAN. Well, there, I think the best thing is to wait until we summon the Attorney General. We intend to have the At torney General testify before the committee sometime.

Mr. KANJORSKI. Mr. Chairman, I suggest the Attorney General may have forgotten and may not have been knowledgeable on that term, and we have to pursue this going up the ladder rather than hoping to come down, where he can say I just don't remember.

The CHAIRMAN. We would hope that by the time he accepts our invitation to appear, now we have tried earlier――

Mr. KANJORSKI. Are we assured that we can gain his access to this committee, or will he take executive privilege?

The CHAIRMAN. Well, I don't know. It depends on what it is that the Members will be seeking to find out at the time, and how that is defined. There is a clear line beyond which even I would recom mend that it would not be proper to go. But we have the chief counsel, and I think he can round out this explanation.

Mr. WEINSTEIN. Thank you, Mr. Chairman.

The CHAIRMAN. Will you stand also and be sworn?

Mr. WEINSTEIN. Yes, sir.

[Witness sworn.]

The CHAIRMAN. Will you please give your name and title to the reporter, so that she will have it on the record.

STATEMENT OF HARRIS WEINSTEIN, CHIEF COUNSEL, OFFICE OF THRIFT SUPERVISION

Mr. WEINSTEIN. Yes. I am Harris Weinstein; I am chief counsel of the Office of Thrift Supervision, and I have held that position since May 7 of this year.

Let me address the question of criminal investigations and issues relating to that. There are, as the attorneys on my staff have indi cated, a number of criminal references pending in this matter They have been given to the Justice Department at various times over a period of years, beginning early in the investigative proces and continuing I would say up until this year.

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Mr. KANJORSKI. Could you give us a specific time, Mr. Weinstein? Mr. WEINSTEIN. I would be pleased to provide that to you, if I may, in writing, and if I may ask, in confidence subject to

The CHAIRMAN. Certainly. You may provide that information for the record, sir.

The information referred to can be found in the appendix.

Mr. WEINSTEIN. The concern that we have and the concern that we believe that the Justice Department has is that when criminal matters are under investigation, there are both rules and concerns related to the investigative process that lead the Justice Department to keep those matters in confidence until they result in a charge or a decision. I believe that is a normal part of the criminal investigative process.

Mr. Ryan, the director of OTS, starting from the day after he Look office in April, has been meeting with the Attorney General and other officers of the Justice Department to address the matter of number of criminal referrals pending generally; speed; timing of bringing those investigations to conclusion.

The priority ought to be attached to particular cases; the manner in which our agency and the Justice Department can work together to expedite the work that is involved in bringing these many criminal referrals and these many cases to an appropriate decision to the criminal legal process.

It is certainly our intention at the OTS to press as vigorously as we can for continuing investigation and to press continuously these criminal charges, in this and in all cases coming out of the difficulties of the savings and loan. I assure the committee that that is what we are doing. In just the 2 weeks that I have been with the OTS, I have had meetings with the Justice Department, I have had numerous phone calls with the Justice Department, all directed toward facilitating and expediting this process.

Mr. KANJORSKI. Mr. Weinstein, I think we had a direct question. Who at the Justice Department talked to you to tell your people that are here today not to talk to this committee?

Mr. WEINSTEIN. My understanding is that that was a conversation between Mr. Ryan and I believe a gentleman named Muller on the staff of the Attorney General.

Mr. KANJORSKI. With you?

Mr. WEINSTEIN. No. With Mr. Ryan.

Mr. KANJORSKI. Director Ryan talked with Mr. Muller?

Mr. WEINSTEIN. Mr. Ryan is my principal; Mr. Ryan is the director of the office. Both Mr. Ryan and I had sought to telephone Mr. Muller yesterday to determine the views of the Justice Department office on the type of question that has been asked, and Mr. Muller returned Mr. Ryan's call first, and Mr. Ryan had the conversation. Mr. SCHUMER. Will the gentleman yield?

Mr. KANJORSKI. Just one second. Could you tell me possibly how telling us the time that a referral was made to the Justice Department could in any way compromise the potential defendants involved in the suit, or in any way compromise the Justice Depart ment's case? Just to give us the time when referrals were made, other than for the sole intention of having the American people and the Congress not to know how slow the criminal process has been moving in these particular instances?

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The CHAIRMAN. We have about 4 minutes to get over there and record our vote, so we will stand in recess for about 10 minut [Recess]

The CHAIRMAN. The committee will please come to order.

The Chair was awaiting Mr. Bunning, who, when we went off the recess, had asked if we would defer to him on his return with this panel. I am trying to honor his request within reasonable limits.

So that in the meanwhile, I would like to recognize OTS counsel Mr. Weinstein, to clarify some matters here that were being d cussed just a few minutes ago.

Mr. WEINSTEIN. Thank you, Mr. Chairman.

While, as I indicated, the reasons related to the investigative process we appreciate not getting into the substance of criminal ferrals in open hearing, I should emphasize that not all of the criminal referrals to which I was referring necessarily involved the transactions which Ms. Van Cleave and these gentlemen were test fying.

They may have involved wholly unrelated matters. They may have been filed by, say, the institution as opposed to others, bu without disclosing any of that, I would like to suggest on the public record that one should not jump to conclusions from the span of dates that I identified as to whether referrals were made to the Justice Department regarding the transactions which the panel has been describing in connection with their testimony about the e aminations.

As I promised, we will provide a letter to the chairman providing more information. If the chairman wishes additional data, we wi be pleased to provide it to you.

Thank you very much, Mr. Chairman.

[The information referred to can be found in the appendix.] The CHAIRMAN. Thank you, Mr. Weinstein.

I think that does clarify the matter somewhat. I can see why the Members didn't-I guess they had information I didn't get in my haste to get back, and that is that we would be having some amendments or votes in quick succession.

I think what we are going to have here, I think the first bells were two or three? So we will have a couple of suspensions-a right. We will reach a critical point in the legislation pending the full House, and that is we will have a motion to recommit, and then 5 minutes after that a final vote on approval or disapproval a the legislation.

This was one matter that I was going to discuss with Mr Hershkowitz. You mentioned some of the transactions, of course, is answer to questions both from Mr. Parris, as well as from one other Member over on our side. I don't remember if it was Mr Neal or not.

We have here in our documentation a letter addressed to chael R. Wise from Neil Bush dated November 5, 1986, in which he's advancing, he says, enclosed please find loan agreement dates October 15, 1986 involving a plan to request advances on a line di credit on the basis of some investment, I believe in Argentina. Could you elaborate on it? Do you recall that?

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In fact, Mr. Chairman, he testified before your Housing Subcommittee on February 1, 1984. Ironically, he served as Chairman of he Thrift Industry Advisory Council to the Federal Reserve Board in the critical year of 1987, when the first FSLIC recapitalization Dill was passed.

He was a strong advocate for the figure of $5 million in funding for FSLIC that year. In fact, he termed the Treasury's call for higher funding of the full $15 billion a damaging media blitz.

He wasn't afraid to speak out then, yet today, he has declined to estify. I think he can enlighten us on the funding of the crisis that we now face.

The other insiders who were the driving force behind Silverado's unique accounting programs have also declined to attend. This is also regrettable. I will join you in issuing the subpoena for their

attendance.

Finally, Mr. Chairman, let me again thank our witnesses. I appreciate their attendance and their willingness to speak openly to the committee today, and I look forward to their testimony.

The CHAIRMAN. Mr. Annunzio, do you have a statement?
Mr. ANNUNZIO. Yes.

Mr. Chairman, the savings and loan crisis is going to cost the American taxpayer $500 billion. Much of that loss is due to the actions of the boards of directors of the failed savings and loans. Too often, the directors were either rubber stamps of management, or were greedy and self-dealing.

We heard yesterday that Neil Bush, as a director of Silverado, presented or voted on $106 million in loans to Ken Good and Bill Walters, two Silverado borrowers with whom he had business deals. All those loans are now in default. The average American businessman may have trouble getting a loan for inventory, but at Silverado there was never a credit crunch for the people with the right friends.

The Justice Department of the United States is charged with ensuring that the criminal laws of the United States are enforced. Those laws include prohibitions on fraud against federally-insured financial institutions, including fraud by directors of savings and

ioans.

Not every failed savings and loan involved fraud by the directors, but enough did that last year, this committee strengthened the laws against these crimes. We also set up a separate authorization of $75 million a year for each of the next 3 years-a total of $225 million-to investigate and prosecute the savings and loan crooks. The Justice Department is not doing anywhere near enough to investigate these cases. It claims that it does not need the money that this Congress authorized.

Yesterday, we heard from OTS that the Justice Department had talked directly with Director Ryan of OTS and told him to refuse to give this committee information about the five criminal referrals concerning Silverado. All we asked for was the dates that the criminal referrals were made. No one sought any information that would jeopardize any ongoing investigation.

Mr. Chairman, this is a cover-up, pure and simple. The question What does the Justice Department want to hide? Is it hiding that for 4 years, it had a criminal referral that might be politically

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embarrassing, and it did not dare investigate it? Or that it simply did not bother to investigate hard savings and loan cases?

When it comes to investigating savings and loan cases, the J tice Department is less inquisitive than Kermit the Frog, softer than Big Bird.

Mr. Chairman, no savings and loan investigation by this commi tee will be complete until the Attorney General appears as a wi ness. We must find out why the Justice Department is so relucta to investigate savings and loan cases. The taxpayers have a bak trillion reasons to want an answer to the question: When are savings and loan crooks going to jail? This is what the people an asking.

The CHAIRMAN. The chairman will observe that despite the esteem that I have for our ranking minority member, that yester day's request was not-Mr. Kanjorski. if I recall correctly, he asking for the data, which time referrals had been made to the J tice Department. In the beginning, he was merely asking for th data of referrals, which of course the witnesses before us had in way indicated that it, with respect to the matter on hand, was ab sequent to the time that the agency had closed down the institu tion or after they had had their examinations.

Subsequent to that, the chief counsel explained that when the year 1986 was used from 1986 until now, that what they had a mind were that they had knowledge that referrals had been made to the Justice Department, not necessarily having to do with this case, but with all cases coming to their attention that, as reguls tors evaluating information, decided that there were matters that should be referred to the Justice Department.

I also pointed out that there was no way the witnesses could answer as to just what the Justice Department did or didn't do or what the basis of the information had been. After all, it is wel known that just because a case is referred to the Justice Depart ment, that does not mean that the Justice Department attorneys find it actionable or that it has a sufficiency in legal standing prepare an adequate and successful case of prosecution.

When we are talking about criminal referrals, we then have ☛we are entering a different area, and when the question arose as to the difference between the civil suits which had been filed in a car of some entities and criminal prosecution, there is no question about it, there is a duty imposed on the Justice Department as well as the executive branch to-pending judicial determinationprotect and safeguard the integrity of their proceedings.

So, I want to clarify the fact that just because it was reported here yesterday, that cases had been referred since 1986, that dom not mean that those cases had anything to do with this particul case of Silverado.

As to the prosecution on the part of the Justice Department they have their track record. And they will have to be asked they will be by Judiciary. We will ask the Attorney General, said yesterday, to report to us on the basis of the testimony heard from the FBI Director in Dallas in April. That had to with the fact that the FBI Director had asked the number of agen that he felt would be adequate, and those requests were not har ored by the Justice Department.