Crime Victims Fund Preservation Act of 2009

Mr. President, I am pleased to join with Senator Crapo to introduce the Crime Victims Fund Preservation Act of 2009, which would restore and increase critical funding for direct services and compensation to victims of crime under the Victims of Crime Act.

I was honored to support the passage of the Victims of Crime Act of 1984, VOCA, which has been the principal means by which the Federal Government has supported essential services for crime victims and their families. The Victims of Crime Act provides grants for direct services to victims, such as state crime victim compensation programs, emergency shelters, crisis intervention, counseling, and assistance in participating in the criminal justice system. These services are all financed by a reserve fund created from fines and penalties paid by Federal criminal offenders, at no cost to taxpayers.

A number of us have worked hard over the years to protect the Crime Victims Fund. State victim compensation and assistance programs serve nearly four million crime victims each year, including victims of violent crime, domestic violence, sexual assault, child abuse, elder abuse, and drunk driving. The Crime Victims Fund makes these programs possible and has helped hundreds of thousands of victims of violent crime bravely move forward with their lives.

Several years ago, I worked to make sure that the Crime Victims Fund would be there in good times, and in bad. We made sure it had a ``rainy day'' capacity so that in lean years, victims and their advocates would not have to worry that the fund would run out of money and that they would be left stranded. More recently, an annual cap has been set on the level of funding to be spent from the Fund in a given year, in part to help preserve adequate funds from year to year. When this cap was established, and when President Bush then sought to empty the Crime Victims Fund of unexpended funds, I joined with Senator Crapo, Senator Mikulski and others from both political parties to make sure that the Crime Victims Fund was preserved. Fortunately Congress has consistently rejected efforts to rob crime victims of resources that are appropriately set aside to assist them and their families.

Unfortunately, the cap on the fund has not kept pace with the demand for compensation and services. From 2006 to 2008, VOCA victim assistance formula grants were cut by $87 billion or 22 percent. This reduction in funding, coupled with the current economic climate, was devastating to victim service providers who were forced to curtail services, lay off staff, and close their doors, jeopardizing the well- being and recovery of many crime victims.

In addition, victim service professionals have seen a clear increase in victimization and victim need in the past year as job losses and economic stress translate into increased violence in the home and in our communities. The National Crime Victims Helpline reported a 25 percent increase in calls in recent months and the National Domestic Violence Hotline reported a similar increase. Local shelters and crisis lines are also reporting a rise in demand as the shortage of affordable housing and rising unemployment are increasing the time that victims stay in emergency shelters. The rising unemployment rate also means victims are less likely to have insurance to cover their crime-related expenses.

At a Judiciary Committee hearing I chaired in April on the Victim of Crime Act, witnesses testified that there has also been an increase in the variety of crimes being committed. The National Crime Victims Helpline has seen an increase in calls from fraud victims people falling prey to ``work at home'' scams, secret shopper scams, investment scams, mortgage fraud, and construction fraud. Such victims are in desperate need of financial counseling and mental health counseling to overcome the stress and emotional impact of falling victim to these scams. Under Federal regulations, States may use compensation and victim assistance programs to aid financial crime victims, but services are not available. Victim service providers are reluctant to expand their outreach and services without assured increased funding and there is already too much competition for the limited funds available. The National Census of Domestic Violence Services conducted last fall showed that in one day, nearly 9,000 victims were turned away from shelter, counseling, and other crucial services because local programs were unable to serve them.

The need for victim assistance and compensation has grown. The Crime Victims Fund can provide more help. Recent years have seen an increase in collections from criminal fines and penalties. Accordingly, Congress has the ability to provide stable and predictable growth without jeopardizing the sustainability of the fund, and should do so through this legislation. The Crime Victims Fund Preservation Act would establish a minimum funding level for programs under VOCA to ensure reasonable and predictable growth in victim services through fiscal year 2014. Providing a stable and predictable funding stream will enable states to expand their programs and outreach to the thousands of victims who have nowhere to turn. Again, I emphasize that it does not cost a dime of taxpayer funds but will come exclusively from Federal criminal fines and penalties.

I want to commend Senator Mikulski, the Chairwoman of the Commerce, Justice, and Science Appropriations Subcommittee, and Senator Shelby, the Ranking Member, for working with the President to provide $100 million in the economic recovery package for crime victims. That additional funding is sorely needed right now and I know it was sincerely appreciated by victim service providers. Funding in the Omnibus Appropriations Act of 2009 together with the Recovery Act funds, restored funding to the 2006 level, adjusted for inflation. A 2010 cap on total VOCA obligations of $705 million is expected to maintain the funding level for assistance grants provided in 2009 through the Recovery Act funding and annual appropriations. I believe that

the certainty this legislation will provide will be helpful to the states, victim service providers, and the citizens they serve, and will help improve this vital program.

I look forward to working with Senator Crapo, Senator Mikulski and many other interested Senators on this initiative to provide increased, stable, and predicable funding for to meet the ongoing need for essential services for crime victims and their families in the years ahead.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, today, I am pleased to join Senator Durbin and Senator Feingold in introducing the Crimes Against Humanity Act of 2009. This legislation will make it a violation of United States law to commit a crime against humanity, and will help ensure that the perpetrators of crimes against humanity do not find safe haven in the United States. I commend Senator Durbin for his work on this legislation and for his leadership as chairman of the Subcommittee on Human Rights and the Law.

Last Congress, I was pleased to work with Senator Durbin to create the Human Rights and the Law Subcommittee, the first-ever congressional committee established to address human rights issues. The work that we have done through this Subcommittee has helped the Senate focus on important and difficult legal human rights issues, including genocide, human trafficking, child soldiers, war crimes, corporate accountability overseas, systematic rape, and torture.

The work of the Human Rights and the Law Subcommittee has already achieved important results. Last Congress, the President signed into law the Child Soldiers Accountability Act, which outlawed the abhorrent practice of recruiting and using child soldiers, and the Genocide Accountability Act, which closed a loophole that had allowed those who commit or incite genocide to seek refuge in our country without fear of prosecution for their actions. These legislative initiatives were a critical step toward showing the international community that the United States will not tolerate human rights abuses at home or abroad, and that those who commit these atrocities must be held accountable for their actions. I am pleased to join Senator Durbin to take the next step to protect victims of crimes against humanity in the United States, and to hold those responsible for these terrible crimes to account.

Along with genocide and war crimes, crimes against humanity are among the most serious crimes under international law. We see such crimes against humanity by groups or governments as part of a widespread or systematic attack against a civilian population. These deplorable crimes include murder, enslavement, torture, rape, arbitrary detention, extermination, hostage taking, and ethnic cleansing, and they continue to take place around the world in places like Uganda, Burma, and Sudan.

Although the United States has strongly and consistently for more than 60 years supported the prosecution of perpetrators of crimes against humanity, there is currently no United States law prohibiting crimes against humanity. As a result, the government is unable to prosecute perpetrators of crimes against humanity found in our country. This legislation will fix this loophole by enabling the Attorney General to prosecute crimes against humanity committed by a U.S. national, legal alien or habitual resident in the United States. The law will also enable the prosecution of any crimes against humanity committed in whole or in part within the United States, as well as offenses that occur outside the United States, if the offender is currently located in the United States.

The actions prohibited by the Crimes Against Humanity Act of 2009 are appalling. They happen too often throughout the world. We must promote accountability for human rights violations committed anywhere in the world, and we must do whatever we can to prevent those who commit such crimes from escaping justice by finding a safe haven in the United States. A foreign policy that seeks to defend human rights will never fully achieve its goals if we undermine our own credibility by failing in our commitment to uphold the highest standards of human rights here at home. I urge

Senators on both sides of the aisle to support this important legislation to help this country take another step toward reclaiming our place as a guardian of human rights.

Mr. President, I rise today to introduce the Crimes Against Humanity Act of 2009. This narrowly-tailored legislation would make it a violation of U.S. law to commit a crime against humanity. Congress must ensure that criminals who commit mass atrocities do not find safe haven in our country.

I would like to thank the other original cosponsors of the Crimes Against Humanity Act, Senator Patrick Leahy of Vermont, the Chairman of the Senate Judiciary Committee, and Senator Russell Feingold of Wisconsin, the Chairman of the Senate Judiciary Subcommittee on the Constitution and the Chairman of the Senate Foreign Relations Subcommittee on African Affairs.

For generations, the U.S. has led the struggle for human rights around the world and has supported holding perpetrators of crimes against humanity accountable. Over 50 years before the Nuremberg trials, George Washington Williams, an African-American minister, lawyer and historian, called for an international commission to investigate ``crimes against humanity'' in the Congo, which was then ruled by Belgium's King Leopold II. Under King Leopold's iron fist, Congo's population was reduced by half, with up to 10 million people losing their lives. In a letter to the U.S. Secretary of State, Mr. Williams decried the ``crimes against humanity'' perpetrated by King Leopold's regime.

Over 50 years later, following the Holocaust, the U.S. led the efforts to prosecute Nazi perpetrators for crimes against humanity at the Nuremberg trials. Crimes against humanity were first defined in the Nuremberg Charter in 1945. Sixteen men were found guilty of crimes against humanity in the Nuremberg trials, including Hermann Goring, commander of the Luftwaffe and the highest-ranking official to order the ``Final Solution.''

Since then, the U.S. has supported efforts to prosecute perpetrators of crimes against humanity, including Nazi war criminals who had escaped accountability. In 1961, Adolf Eichman, the ``architect of the Holocaust,'' was convicted in Israel for committing crimes against humanity. Michael Musmanno, a U.S. Naval officer and judge at the Nuremberg trials, was a key prosecution witness. In 1987, Klaus Barbie, the ``Butcher of Lyon'', was convicted in France for crimes against humanity he committed while heading the Gestapo in Lyon.

The U.S. has also supported the prosecution of crimes against humanity before the International Criminal Tribunal for the former Yugoslavia, the International Criminal Tribunal for Rwanda, and the Special Court for Sierra Leone.

More recently, we have seen crimes against humanity being committed on a massive scale in Darfur in western Sudan. In this region of six million people, hundreds of thousands were killed and as many as 2.5 million were driven from their homes in recent years. Part of the solution to the carnage in Darfur is arresting and prosecuting the perpetrators. Otherwise, these perpetrators will continue to act with impunity and victims will feel they have no recourse but to resort to violence themselves.

We have also seen crimes against humanity being committed in the eastern Democratic Republic of Congo, most disturbingly through the use of rape as a weapon of war. The systematic and deliberate use of mass rape to humiliate, expel and destroy communities in the eastern Democratic Republic of Congo offends our common humanity.

However, it is not only Darfur and the eastern Democratic Republic of Congo that are safe havens for the perpetrators of crimes against humanity. Perpetrators of mass atrocities have sought to escape accountability for their actions by coming to our own country. According to the Department of Homeland Security, over 1000 war criminals have found safe haven in the United States.

I am the Chairman of the Judiciary Committee's Human Rights and the Law Subcommittee. Last year I held a Human Rights and the Law Subcommittee hearing entitled ``From Nuremberg to Darfur: Accountability for Crimes Against Humanity.'' This hearing identified a glaring loophole in U.S. law--currently, there is no U.S. law prohibiting crimes against humanity. As a result, the U.S. government is unable to prosecute perpetrators of crimes against humanity found in our country. In contrast, other grave human rights violations, including genocide, using or recruiting child soldiers, and torture, are crimes under U.S. law.

We heard testimony in the Human Rights and the Law Subcommittee that many U.S. allies have incorporated crimes against humanity into their criminal codes, including Australia, Canada, Germany, the Netherlands, New Zealand, South Africa, Spain, Argentina and the United Kingdom.

Expert witnesses testified before the Subcommittee about the urgent need for the United States to enact similar legislation. Gayle Smith, the Co-Founder of the Enough Project, testified that it is in our national interest to enact crimes against humanity legislation:

If unchallenged, the violence that defines crimes against

humanity feeds on itself: conflicts spread, institutions

crumble, economies decline and young people are taught the

dangerous lesson that violence is more potent tool for change

than hope. . . . Ensuring that those who commit crimes

against humanity are in violation of U.S. law is in our

national interests, and clearly in the interests of the

victims who have few if any protectors or defenders.

Diane Orentlicher, a law professor at American University's Washington College of Law and one of our country's leading experts on human rights crimes, testified:

The United States has, since Nuremberg, provided

indispensable leadership in ensuring prosecution of crimes

against humanity by various international tribunals, as well

as by other countries we have supported. So it's quite

remarkable that we of all countries don't have a law on our

books making it possible to prosecute this crime when

perpetrators show up in our own territory.

The crimes against humanity loophole has real consequences. When the U.S. government learned that Marko Boskic, who allegedly participated in the Srebrenica massacre in the Bosnian conflict, was living in Massachusetts, he was charged with visa fraud, rather than crimes against humanity. ``They should condemn him for the crime,'' said Emma Hidic, whose two brothers were among the estimated 7,000 men and boys killed in the Srebrenica massacre, upon learning that Boskic had been charged only with visa fraud.

The Crimes Against Humanity Act would close this loophole in U.S. law

and give our government the authority to prosecute those found in the U.S. who commit crimes against humanity. In keeping with the principles the U.S. and our allies established after World War II, this legislation would help ensure that the perpetrators of crimes against humanity do not find safe haven in our country.

This bill would make it a violation of U.S. law to commit a crime against humanity, i.e. any widespread and systematic attack directed against a civilian population that involves murder, enslavement, torture, rape, arbitrary detention, extermination, hostage taking or ethnic cleansing.

I am the author of the Genocide Accountability Act, the Child Soldiers Accountability Act, and the Trafficking in Persons Act, legislation passed unanimously by Congress and signed into law by President George W. Bush that denies safe haven in the United States to the perpetrators of genocide, child soldier recruitment and use, and human trafficking. The Crimes Against Humanity Act is the next logical step. It would subject perpetrators of crimes against humanity to criminal sanctions, in the same way that perpetrators of genocide, child soldier recruitment and human trafficking are subject to criminal sanctions under U.S. law.

Ensuring U.S. law prohibits crimes against humanity is consistent with the longstanding U.S. support for the prosecution of crimes against humanity perpetrated in World War II, Rwanda, the former Yugoslavia and Sierra Leone, among other places.

This legislation will send a clear message to perpetrators of crimes against humanity that there are real consequences to their actions. By holding such individuals criminally responsible, our country will help to deter crimes against humanity.

The Crimes Against Humanity Act is supported by a broad coalition of human rights and religious groups, including Armenian Assembly of America, Center for Justice and Accountability, Center for Victims of Torture, Enough Project, the Episcopal Church, Genocide Intervention Network, Human Rights First, Human Rights Watch, International Justice Mission, Jubilee Campaign USA, Inc., Physicians for Human Rights, Robert F. Kennedy Center for Justice & Human Rights, Save Darfur Coalition, the United Methodist Church, and U.S. Campaign for Burma. Today I received a letter of support for the Crimes Against Humanity Act from 29 organizations, including all of those I have named. As the letter explains:

This legislation would fill an existing gap in U.S. law by

allowing U.S. prosecutors to hold the perpetrators of mass

atrocities accountable for their acts. While often less

publicized than genocides, crimes against humanity are as

devastating to their victims and as worthy of vigorous and

unbending attention from the United States government. We

must ensure that perpetrators of mass atrocities cannot evade

justice by coming to the United States.

Daoud Hari is a refugee from Darfur now living in our country and author of The Translator: A Tribesman's Memoir of Darfur. I urge my colleagues to contemplate the challenge that Mr. Hari posed at the Human Rights Subcommittee hearing on crimes against humanity: while none of us individually can stop the crimes against humanity committed in Darfur and other countries around the globe, failing to take action only ensures that these horrific atrocities will continue.

With far too few exceptions, we have failed to prevent and stop crimes against humanity. The promise of Nuremberg remains unfulfilled. We have a moral obligation to take action to help the survivors of crimes against humanity around the world and to help prevent this horrific crime by holding perpetrators accountable.

I urge my colleagues to support this legislation.

Mr. President, I ask unanimous consent that the text of the bill and a letter of support be printed in the Record.

Mr. President, I am pleased to join with Senator Crapo to introduce the Crime Victims Fund Preservation Act of 2009, which would restore and increase critical funding for direct services and compensation to victims of crime under the Victims of Crime Act.

I was honored to support the passage of the Victims of Crime Act of 1984, VOCA, which has been the principal means by which the Federal Government has supported essential services for crime victims and their families. The Victims of Crime Act provides grants for direct services to victims, such as state crime victim compensation programs, emergency shelters, crisis intervention, counseling, and assistance in participating in the criminal justice system. These services are all financed by a reserve fund created from fines and penalties paid by Federal criminal offenders, at no cost to taxpayers.

A number of us have worked hard over the years to protect the Crime Victims Fund. State victim compensation and assistance programs serve nearly four million crime victims each year, including victims of violent crime, domestic violence, sexual assault, child abuse, elder abuse, and drunk driving. The Crime Victims Fund makes these programs possible and has helped hundreds of thousands of victims of violent crime bravely move forward with their lives.

Several years ago, I worked to make sure that the Crime Victims Fund would be there in good times, and in bad. We made sure it had a ``rainy day'' capacity so that in lean years, victims and their advocates would not have to worry that the fund would run out of money and that they would be left stranded. More recently, an annual cap has been set on the level of funding to be spent from the Fund in a given year, in part to help preserve adequate funds from year to year. When this cap was established, and when President Bush then sought to empty the Crime Victims Fund of unexpended funds, I joined with Senator Crapo, Senator Mikulski and others from both political parties to make sure that the Crime Victims Fund was preserved. Fortunately Congress has consistently rejected efforts to rob crime victims of resources that are appropriately set aside to assist them and their families.

Unfortunately, the cap on the fund has not kept pace with the demand for compensation and services. From 2006 to 2008, VOCA victim assistance formula grants were cut by $87 billion or 22 percent. This reduction in funding, coupled with the current economic climate, was devastating to victim service providers who were forced to curtail services, lay off staff, and close their doors, jeopardizing the well- being and recovery of many crime victims.

In addition, victim service professionals have seen a clear increase in victimization and victim need in the past year as job losses and economic stress translate into increased violence in the home and in our communities. The National Crime Victims Helpline reported a 25 percent increase in calls in recent months and the National Domestic Violence Hotline reported a similar increase. Local shelters and crisis lines are also reporting a rise in demand as the shortage of affordable housing and rising unemployment are increasing the time that victims stay in emergency shelters. The rising unemployment rate also means victims are less likely to have insurance to cover their crime-related expenses.

At a Judiciary Committee hearing I chaired in April on the Victim of Crime Act, witnesses testified that there has also been an increase in the variety of crimes being committed. The National Crime Victims Helpline has seen an increase in calls from fraud victims people falling prey to ``work at home'' scams, secret shopper scams, investment scams, mortgage fraud, and construction fraud. Such victims are in desperate need of financial counseling and mental health counseling to overcome the stress and emotional impact of falling victim to these scams. Under Federal regulations, States may use compensation and victim assistance programs to aid financial crime victims, but services are not available. Victim service providers are reluctant to expand their outreach and services without assured increased funding and there is already too much competition for the limited funds available. The National Census of Domestic Violence Services conducted last fall showed that in one day, nearly 9,000 victims were turned away from shelter, counseling, and other crucial services because local programs were unable to serve them.

The need for victim assistance and compensation has grown. The Crime Victims Fund can provide more help. Recent years have seen an increase in collections from criminal fines and penalties. Accordingly, Congress has the ability to provide stable and predictable growth without jeopardizing the sustainability of the fund, and should do so through this legislation. The Crime Victims Fund Preservation Act would establish a minimum funding level for programs under VOCA to ensure reasonable and predictable growth in victim services through fiscal year 2014. Providing a stable and predictable funding stream will enable states to expand their programs and outreach to the thousands of victims who have nowhere to turn. Again, I emphasize that it does not cost a dime of taxpayer funds but will come exclusively from Federal criminal fines and penalties.

I want to commend Senator Mikulski, the Chairwoman of the Commerce, Justice, and Science Appropriations Subcommittee, and Senator Shelby, the Ranking Member, for working with the President to provide $100 million in the economic recovery package for crime victims. That additional funding is sorely needed right now and I know it was sincerely appreciated by victim service providers. Funding in the Omnibus Appropriations Act of 2009 together with the Recovery Act funds, restored funding to the 2006 level, adjusted for inflation. A 2010 cap on total VOCA obligations of $705 million is expected to maintain the funding level for assistance grants provided in 2009 through the Recovery Act funding and annual appropriations. I believe that

the certainty this legislation will provide will be helpful to the states, victim service providers, and the citizens they serve, and will help improve this vital program.

I look forward to working with Senator Crapo, Senator Mikulski and many other interested Senators on this initiative to provide increased, stable, and predicable funding for to meet the ongoing need for essential services for crime victims and their families in the years ahead.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I am introducing the Filipino Veterans Family Reunification Act of 2009. I am pleased that my colleagues, Senators Inouye, Kennedy and Cantwell, have joined me in introducing this bill. Our bill will reunite Filipino World War II veterans who are U.S. citizens and U.S. residents with their children in the Philippines, who have languished for years on the visa waiting list. In seeking an exemption from the numerical limitation on immigrant visas for the children of the Filipino veterans, our bill will address and resolve an issue rooted in a set of historical circumstances that are now nearly 7 decades old.

In 1934, the Philippines, an American possession since 1898, was placed on the path to independence. The enactment of the Philippine Independence Act established the Philippines as a commonwealth with certain powers over its internal affairs but with the United States retaining sovereign power. It also set a 10-year timetable for the commonwealth's independence from the U.S.

In 1941, President Franklin D. Roosevelt responded to Japan's increasingly aggressive military posture in Asia and the Pacific by issuing a presidential order that called and ordered into the service of the Armed Forces of the United States all of the organized military forces of the Commonwealth of the Philippines. The authority for this presidential order was the Philippine Independence Act, which retained for the United States sovereign power over the commonwealth. Accordingly, over 200,000 Filipinos were drafted into the United States armed forces, and served honorably during World War II.

In 1942, Congress passed the Second War Powers Act, including Sections 701 and 702, Nationality Act of 1940, which authorized the naturalization of all aliens serving in the U.S. armed forces. Pursuant to this act, about 7,000 Filipinos serving in the U.S. armed forces outside the Philippines became U.S. citizens. Naturalization of the Filipinos who had served in the U.S. armed forces in the Philippines began in Manila in August 1945, but was halted two months later when the American vice consul's naturalization authority was revoked.

At the time, U.S. officials indicated that the government of the Commonwealth of the Philippines had expressed concerns that the naturalization, and likely emigration to the U.S., of the Filipino veterans would drain the soon-to-be-independent Philippines of essential manpower and undermine the new nation's postwar reconstruction efforts. Others, however, believed this was a pretext for what came to be known as the Rescissions Act of 1946.

In February and May 1946, the 79th Congress passed the First Supplemental Surplus Appropriations Rescission Act, PL 79-301, and the Second Supplemental Surplus Appropriations Rescission Act, PL 79-391, respectively. Now collectively known as the Rescissions Act of 1946, PL 79-301 authorized a $200 million appropriation to the Commonwealth Army of the Philippines conditioned on a provision that service in the Commonwealth Army of the Phillippines should not be deemed to have been service in the active military or air service of the U.S.

It would take Congress more than four decades to acknowledge that the Filipino World War II veterans had, indeed, served in the U.S. armed forces.

The Immigration Act of 1990 included a provision that offered the opportunity to obtain U.S. citizenship to those Filipino veterans who had not been naturalized pursuant to the Nationality Act of 1940. And nineteen years later, the American Recovery and Reinvestment Act, ARRA, of 2009 included a provision that authorized the payment of benefits to the 30,000 surviving Filipino veterans in the amount of $15,000 for those who are citizens and $9,000 for those who are non-citizens.

Of the 30,000 surviving Filipino World War II veterans, 7,000 are U.S. citizens and reside in this country. Many of these U.S. citizens filed visa petitions for their children, who remained in the Philippines. Now in their eighties and nineties, these men continue to wait for their children, who languish on the visa waiting lists, to join them. The Filipino Veterans Family Reunification Act exempts the veterans' children, about 20,000 individuals in all, from the numerical limitation on immigrant visas. It does not require any appropriation and will serve to not only reunite these veterans with their children, but also honor their too-long-forgotten World War II service to this Nation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, today I am introducing the Close the SILO/LILO Loophole Act. This legislation will close a loophole in which banks and other entities are taking advantage of the financial crisis to exploit transit agencies and other local public entities to collect windfall payments. This bill seeks to permanently end this abusive practice, saving the public scarce resources.

Sale-In/Lease Out and Lease-In/Lease Out, SILO/LILO, contracts are a type of financial transaction in which a public entity transfers assets, equipment or infrastructure, to a bank or other entity while simultaneously entering into a long-term lease with the same bank or other entity. From the 1990's to 2003, public agencies, including transit agencies and rural electric coops, entered into these LILO and SILO transactions. As part of the agreement, the bank required the public agency to pay a AAA-rated entity a fee to make lease payments throughout the term of the lease. This arrangement provided security for the banks and insured that lease payments would be made.

When the financial crisis hit last year, many AAA-rated entities involved in these transactions were downgraded. Banks took advantage of these downgrades and some sued these public agencies, citing a clause in the agreements that required only AAA-rated entities to make lease payments. They did this even though the public agencies in question did not miss any of their regular lease payments to the banks.

Not only is this predatory, but allowing this practice to continue is also contrary to public policy. While the SILO/LILO contracts provided much needed resources for capital intensive projects that benefitted the public, they also provided tax benefits to the banks--tax benefits that Congress found to be tax avoidance schemes and effectively eliminated in 2003. In 2008, the Internal Revenue Service proposed a settlement of the leases, effectively eliminating all future tax benefits while allowing the underlying commercial transactions to remain in place. If we let these suits against public agencies continue, we are basically allowing banks to get these tax benefits through another means--taking taxpayer money from public transit agencies and other public agencies around the Nation.

At this moment in time, we have myriad infrastructure needs. Public agencies are working hard to fill the demand for infrastructure projects. President Obama and Congress acknowledged the need and delivered the American Recovery and Reinvestment Act. Now is not the time to financially burden the agencies that we rely on for building, repairing, maintaining and preserving our infrastructure. The Close the SILO/LILO Loophole Act will help lift the uncertainty under which these public agencies are operating, enabling them to serve the public better. I hope to work closely with Chairman Baucus to end this crisis so public agencies can continue to serve the public and not banks seeking a windfall.