Intelligence Community Audit Act of 2009

Mr. President, today, I am pleased to introduce with Senator Grassley the Fraud Enforcement and Recovery Act, FERA, of 2009, a bipartisan bill that will reinvigorate our Nation's capacity to investigate and prosecute the kinds of financial frauds that have so severely undermined our economy and hurt so many hard working people in this country.

Our Nation is in the midst of its most serious economic crisis since the Great Depression. With each passing week, tens of thousands more Americans lose their jobs to layoffs, and many thousands have already lost their homes to foreclosure. We learn more and more each day about the causes of this debacle, and it is now clear that unscrupulous mortgage brokers and Wall Street financiers were among the principle contributors of this economic collapse.

As the crisis worsened last fall, I called upon Federal law enforcement to track down and punish those whose conduct went beyond mere negligence or incompetence and who were directly responsible for the corporate and mortgage frauds that helped make the economic downturn far worse than anyone predicted. With the new tools and resources in this bill, it will be easier to ensure that all of those responsible for these financial crimes are held accountable.

While the full scope of the fraud that triggered this economic crisis is still unknown, we have already learned a great deal about what went wrong. As banks and private mortgage companies relaxed their standards for loans, approving ever riskier mortgages with less and less due diligence, they created an environment that invited fraud. Private mortgage brokers and

lending businesses came to dominate the home housing market, and these companies were not subject to the kind of banking oversight and internal regulations that had traditionally helped to prevent fraud. We are now seeing the results of this lax supervision and accountability.

In the last six years, suspicious activity reports alleging mortgage fraud that have been filed with the Treasury Department have increased more than tenfold, from about 5,400 in 2002 to more than 60,000 in 2008. In the last three years, the number of criminal mortgage fraud investigations opened by the FBI has more than doubled, and the FBI anticipates a new wave of cases that may double that number yet again. Despite the increase, the FBI currently has fewer than 250 special agents nationwide assigned to financial fraud cases. At current levels, they cannot even begin to investigate the more than 5,000 fraud allegations they receive from the Treasury Department each month.

Of course, the problem is not limited to mortgage frauds. As is so common in today's financial markets, home mortgages were packaged together and turned into securities that were bought and sold in largely unregulated markets on Wall Street. Here again, the environment invited fraud. As the value of the mortgages started to decline with falling housing prices, Wall Street financiers began to see these mortgage-backed securities unravel. Unfortunately, some were not honest about these securities, leading to even more fraud, and victimizing investors nationwide.

All of this fraud has contributed to an unprecedented collapse in the mortgage-backed securities market. In the past year, banks and financial institutions in the United States alone have suffered more than $500 billion in losses associated with the sub-prime mortgage industry. Some of our Nation's largest and most venerable financial institutions collapsed as a result. The list of publicly-traded companies that declared bankruptcy or have been taken over by the Federal Government because of the mortgage-backed securities market collapse include Fannie Mae, Freddie Mac, Bear Stearns, IndyMac, and Lehman Brothers.

As we take steps to make sure this kind of collapse cannot happen again, we must reinvigorate our anti-fraud measures and give law enforcement the tools and resources they need to root out fraud so that it can never again place our financial system at risk. Taxpayers, who bear the burden of this financial downturn, deserve to know that government is doing all it can to hold responsible those who committed fraud in the run-up to this collapse. This bill will do just that.

This bipartisan legislation begins by providing the resources needed for law enforcement to uncover and go after these frauds. The bill authorizes $155 million a year for hiring fraud prosecutors and investigators at the Justice Department for fiscal years 2010 and 2011. This includes $65 million a year for the FBI to bring on 190 additional special agents and more than 200 professional staff and forensic analysts to rebuild its ``white collar'' investigation program. With this funding, the FBI can double the number of its mortgage fraud task forces nationwide--from 26 to more than 50--that target fraud in the hardest hit areas in our Nation. This also includes $50 million a year for U.S. Attorneys' offices to staff those strike forces and $40 million for the criminal, civil, and tax divisions at the Justice Department to provide special litigation and investigative support to those efforts. The bill also authorizes $60 million a year for fiscal years 2010 and 2011 for investigators and analysts at the U.S. Postal Inspection Service and the Office of Inspector General for the Housing and Urban Development Department to combat fraud against Federal assistance programs and financial institutions.

Of course, the economic recovery legislation includes new appropriations of $75 million for FBI salaries and $2 million for the Inspector General for the Treasury Department, yet certainly far more needs to be done to address the full scope of these enforcement issues now and in the future.

The Fraud Enforcement and Recovery Act also makes a number of straightforward, important improvements to fraud and money laundering statutes to strengthen prosecutors' ability to combat this growing wave of fraud. Specifically, the bill amends the definition of ``financial institution'' in the criminal code in order to extend Federal fraud laws to mortgage lending businesses that are not directly regulated or insured by the Federal Government. These companies were responsible for nearly half the residential mortgage market before the economic collapse, yet they remain largely unregulated and outside the scope of traditional Federal fraud statutes. This change will apply the Federal fraud laws to private mortgage businesses like Countrywide Home Loans and GMAC Mortgage, just as they apply to federally insured and regulated banks.

The bill would also amend the major fraud statute to protect funds expended under the Troubled Asset Relief Program and the economic stimulus package, including any government purchases of preferred stock in financial institutions. The U.S. Government has provided extraordinary economic support to our banking system, and we need to make sure that none of those funds are subject to fraud or abuse. This change will give Federal prosecutors and investigators the explicit authority they need to protect taxpayer funds.

The legislation would amend the Federal securities statute to cover fraud schemes involving commodities futures and options, including derivatives involving the mortgage-backed securities that caused such damage to our banking system.

This bill will also strengthen one of the core offenses in so many fraud cases--money laundering--which was significantly weakened by a recent Supreme Court case. In United States v. Santos, the Supreme Court misinterpreted the money laundering statutes, limiting their scope to only the ``profits'' of crimes, rather than the ``proceeds'' of the offenses. The Court's mistaken decision was contrary to Congressional intent and will lead to financial criminals escaping culpability simply by claiming their illegal scams had not made a profit. This erroneous decision must be corrected immediately, as dozens of money laundering cases have already been dismissed.

Lastly, FERA improves one of the most potent civil tools we have for rooting out waste and fraud in government--the False Claims Act. The effectiveness of the False Claims Act has recently been undermined by court decisions which limit the scope of the law and allow sub- contractors paid with government money to escape responsibility for proven frauds. The False Claims Act must quickly be corrected and clarified in order to protect from fraud the Federal assistance and relief funds expended in response to our current economic crisis.

The Federal Government has spent hundreds of billions of dollars to stabilize our banking system, and Congress will soon spend even more to restart our economic recovery. But to date, we have paid far too little attention to investigating and prosecuting the mortgage and corporate frauds that has so dramatically contributed to this economic collapse.

Congress should move quickly to pass this legislation so the American taxpayers can be confident that those who are criminally responsible for contributing to this economic disaster are caught and held fully accountable and to ensure that the money we are now spending to restore America is protected from fraud in the future.

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

Mr. President, I am pleased today to announce the introduction of the Global Food Security Act of 2009. I would like to thank my friend Senator Casey for lending his ideas and support to this bipartisan effort, and Senator Durbin for his early cosponsorship. Finally, I want to thank the members of USAID's informal food security team, who advised us on the nature of food insecurity and possible legislative solutions.

As we know, food prices started a steep climb in the fall of 2007 and continued to increase during 2008. The increases pushed an additional 75 million people into poverty. While prices have abated somewhat, millions of people still face difficulty in food access and availability, and malnutrition rates in many parts of the world remain alarmingly high. The price crisis demonstrated that there are significant structural challenges to attaining global food security. The system is vulnerable to periodic disruptions that both expose and exacerbate deeper problems.

We live in a world where nearly one billion people suffer from chronic food insecurity. When droughts occur, hurricanes hit, or other disruptions arise--creating transitory food insecurity the economic prospects of those living in or near poverty are gravely threatened. In fact, the World Food Program reports that 25,000 people die each day from malnutrition-related causes. Health experts advise us that a diverse and secure food supply has major health benefits, including increasing child survival, improving cognitive and physical development of children, and increasing immune system function including resistance to HIV/AIDS. Prolonged malnutrition in children results in stunting and cognitive difficulties that last a lifetime.

Food insecurity is a global tragedy, but it is also an opportunity for the United States. The United States is the indisputable world leader in agricultural production and technology. A more focused effort on our part to join with other nations to increase yields, create economic opportunities for the rural poor, and broaden agricultural knowledge could begin a new era in U.S. diplomacy. Such an effort could improve our broader trade relations and serve as a model for similar endeavors in the areas of energy and scientific cooperation. Achieving food security for all people also would have profound implications for peace and U.S. national security. Hungry people are desperate people, and desperation often sows the seeds of conflict and extremism.

The United States has always stood for big ideas--from the founding of the

Republic on the basis of freedom to President Kennedy's vow to put a man on the moon. One of today's big ideas should be the eradication of hunger. We can bring America's dedication to science, innovation, technology, and education together to lead an effort devoted to overcoming the obstacles to food security.

The Global Food Security Act of 2009 is a 5-year authorization that seeks to provide solutions that will have the greatest effect. First, it creates a Special Coordinator for Global Food Security and puts that person in charge of developing a food security strategy. We call on the development of that strategy to take a whole-of-government approach and to work with other international donors, the NGO community, and the private sector. Addressing food security requires more than investing in agriculture; it also requires improvements in infrastructure, the development of markets, access to finance, and sound land tenure systems, to name just a few.

Second, the bill authorizes additional resources for agricultural productivity and rural development. U.S. foreign assistance for agriculture has declined by nearly 70 percent since the 1980s. Globally, only four percent of official development assistance from all donors is currently allocated for agriculture. This amounts to neglect of what should be considered one of the most vital sectors in the alleviation of poverty. Food shortages are likely to recur frequently if the United States and the global community fail to invest in agricultural productivity in the developing world.

Third, the bill improves the U.S. emergency response to food crises by creating a separate Emergency Food Assistance Fund that can make local and regional purchases of food, where appropriate. Funds can be used for emergency food and non-food assistance. The Government Accountability Office reports that it can often take four to six months from the time a crisis occurs until U.S. food shipments arrive. Our intention is to provide USAID with the flexibility to respond to emergencies more quickly in order to complement food aid programs in the U.S. Department of Agriculture.

World leaders must understand that over the long term, satisfying global demand for more and better food can be achieved only by increasing yields per acre. In the 1930s, my father, Marvin Lugar, produced corn yields of approximately 40 to 50 bushels per acre. Today, the Lugar farm yields about 150 bushels per acre on the same land in Marion County, Indiana. The Green Revolution saw the introduction of high yield seeds and improved agricultural techniques that resulted in a near doubling of cereal grain production per acre over 20 years. But more recently, food production has not kept pace with population increases. By 2050, it is projected that population growth will require another doubling of food production. Unless much greater effort is devoted to this problem, the world is likely to experience more frequent and intense food crises that increase migration, stimulate conflicts and intensify pandemics.

Moreover, the task of doubling food production is likely to be complicated by the effects of climate change. The important report by Sir Nicolas Stern estimated that a 2 degree celsius increase in global temperature will cut agricultural yields in Africa by as much as 35 percent. Thus, farmers around the world will be asked to meet the demands of global demographic expansion, even as they may be contending with a degrading agricultural environment that significantly depresses yields in some regions.

Increasing acreage under production will not satisfy the growth in food demand, and these steps come with serious environmental and national security costs. We need a second green revolution that will benefit developed and developing nations alike.

Recent studies have demonstrated that funds spent in agriculture can be up to twice as beneficial to economic growth as spending in other areas. It seems, therefore, that our overall foreign aid strategy would benefit from restoring agriculture programs to their former prominence. The bill increases funding for these programs in the first year by $750 million. The increase would reach $2.5 billion in year five. Because those who subsist on less than $1 a day spend at least half their incomes on food, according to the International Food Policy Research Institute, the bill highlights the need to focus on those living in extreme poverty.

In thinking about how to approach agricultural productivity, we tried to draw from the experience of U.S. land grant colleges and the contributions they have made to U.S. agriculture. The bill seeks to strengthen institutions of higher education in the areas of agriculture sciences, research and extension programs. Investments in human capital and institutional capacity are important to developing a robust agricultural sector.

Universities and research centers can play an important role in achieving technological advances that are appropriate to local conditions. As such, the bill calls for increasing collaborative research on the full range of biotechnological advances including genetically modified technologies.

I hope that our bill will begin a productive dialogue on how our government can be a more effective partner with NGOs and private actors in promoting food security. There is no good reason why nearly a billion people should be food insecure or that the world should have to endure the social upheaval and risks of conflict that this insecurity causes.

I look forward to working with colleagues to improve the U.S. and global efforts to alleviate food insecurity and advance agricultural knowledge and technology worldwide.

Mr. President, I rise to introduce important legislation today.

Last year, this body passed the Consumer Product Safety Improvement Act. Overall, I think this was a good bill, and will contribute to improving our children's safety.

However, as is the case sometimes, we are now learning about some of the unintended consequences arising from that legislation. I've heard from Utahns who are very concerned that parts of the act are going to put them out of business and harm those that benefit from their products and services.

Next week, as part of the Consumer Product Safety Improvement Act, a new lead standard for products goes into effect. The act makes it illegal to sell products that contain more lead than the new standard allows--it classifies those products as banned hazardous substances. The new standard should help protect our children from the harmful effects of lead poisoning.

The act also requires manufacturers to use accredited third-party laboratories to certify the safety of their products made for children ages 12 and under. If you don't test the product, you can't sell it. This makes perfect sense.

But here's the problem: while resellers of those products are exempt from the testing requirements of the legislation, they are not exempt from the penalties associated with violating the act. Violations can result in criminal punishment of up to $250,000 and 5 years in prison, and civil liability up to $15 million. All of this is scheduled to go into effect on February 10th of this year--less than one week from today.

However, the Consumer Product Safety Commission understands there are problems associated with the act. I met with Acting Commissioner Nancy Nord last Friday about these issues. We discussed both the act's potential problems and the importance of maintaining public safety. That same day, her organization postponed the testing and certification requirements of the act for one year. They needed additional time to finalize the rules, and issue clearer guidance on how businesses should comply with the law. Congress gave them the discretion to do this.

However, and this is the problem, the Consumer Product Safety Commission doesn't have the discretion to postpone the actual standard--how much lead is legally allowable in certain products. So you have a situation where the agency is not enforcing the standard by requiring testing and certification while at the same time, the companies that have products in their inventory that exceed the lead standard are subject to both criminal and civil penalties. As one who ran his own business, I can tell you that this makes no sense.

The legislation that I introduce here today will remedy this seeming contradiction. My legislation gives the commission the authority, if it determines it's necessary, to also delay implementing the new lead standards until they have finalized the rules and begin to enforce the law. If the commission were to exercise those authorities, it would give both Congress and the Consumer Product Safety Commission enough time to really evaluate the effects of this legislation, particularly on our small businesses and thrift enterprises, and implement something that actually makes sense.

You must understand that I am not opposed to the new lead standards or keeping our children safe. My bill is not mandating a year delay; it's simply giving the commission that authority. In the meantime, we must craft some sort of compromise before this well-intended law wreaks havoc upon many of our small businesses and those in the thrift industry that serve the lower income in our country.

Let me explain some of the problems associated with the CPSIA.

Some of my constituents who are concerned about this bill are running small businesses out of their homes to supplement their family income during these difficult economic times. One constituent, Katie Erwin, recently wrote to my office to tell me her personal experience. She designs and makes baby dresses that are sold on the Internet. Her dresses require the use of many fabrics, buttons, snaps, and elastic materials. She has done her research into what her business will have to do after the CPSIA becomes law. Even though she uses only materials that have been proven to have safe lead content, she has to have her end product tested. Not just each dress, but each element of each dress. At $75 per test, one dress could end up costing $750. She told us that, in order to be compliant, the dresses would be so expensive that she'd never make a profit. And that is if she could even sell the more expensive dresses. Other small and home-based businesses tell the same story. Many fear going out of business, and don't know how to cope with the new enforcement.

The Ogden Rescue Mission in northern Utah has two thrift stores that have been around for decades selling used goods. The owner has made it clear that he will stop selling any children's products on February 10 because he doesn't want to break the law or be held liable for inadvertently selling a now-illegal product. Companies risk losing their insurance if they accidentally sell an unsafe product. With the new standards required by the Consumer Product Safety Improvement Act, the chance of that happening is almost certain. I have to believe that larger thrift stores like Deseret Industries, the Salvation Army, and Goodwill Industries will all have similar concerns once the Act is fully understood and implemented.

Remember, these companies are going to be subject to criminal penalties and civilly liable for products they sell that exceed the standard, including the resellers whom the law exempts from the testing and certification requirements. Again, five years in prison, $250,000 in criminal penalties and $15 million in civil penalties.

At a time when we are debating how to stimulate the economy and keep businesses afloat, we should not overlook this problem that has the potential to cost our economy millions of dollars in litigation costs and many, many jobs if it is not implemented in the right way. During an economic downturn like the one we are experiencing, thrift stores and others that sell used goods are going to be more important than ever. Let's make sure they are able to serve our communities by providing the commission with the tools necessary to work out the problems associated with implementing the CPSIA.

I hope the Senate expeditiously considers my legislation. I think this approach makes sense, and will ultimately help the commission to better implement this law. I understand others may have different approaches to resolving the same problem, and I would invite a discussion of this issue during the coming weeks with my colleagues so we can fix it quickly before we do irreparable damage to businesses across the country.

Mr. President, today I rise to introduce a bill that is needed by small and seasonal businesses all over the nation. In 2005 I introduced and the Senate overwhelmingly passed legislation to keep these small and seasonal businesses alive. For many years they have relied on the H-2B visa program to meet these needs, but this year they can't get the temporary labor they need because they have been shut out of the H-2B visa program. That program lets them hire temporary foreign workers when no American workers are available.

So today, I join with my colleague Senator Specter to introduce legislation that provides a quick and temporary fix to the H-2B problem. The Save our Small and Seasonal Businesses Act of 2009 will help these employers by extending the H-2B returning worker exemption for three years. It does not raise the cap and keeps the limit at 66,000. I urge my colleagues to work with us to pass this legislation quickly to save these businesses and the thousands of American jobs they provide.

Many in this body know about the H-2B crisis--a real crisis to thousands of small and seasonal businesses who face a shortage of workers as they approach their seasons. These small businesses count on the H-2B visa program to keep their businesses afloat. But this year, because the cap was reached so early in the year, many of these businesses will be unable to get the seasonal workers that they need to survive.

Hitting the cap so early will have a great impact on Maryland. We have a lot of summer seasonal businesses in Maryland on the Eastern Shore, in Ocean City or working the Chesapeake Bay. Many of our businesses use the program year after year. They hire all the American workers they can find, but they need additional help to meet seasonal demands. Because the cap will be reached so early this year summer employers face a disadvantage. They can't use the program, so they can't meet their seasonal needs and many will be forced to limit services, lay-off permanent U.S. workers or, worse yet, close their doors.

These are family businesses and small businesses in small communities in Maryland. If the business suffers the whole community suffers. For seafood companies like J.M. Clayton, what they do is more than a business, it's a way of life. Started over a century ago and run by the great grandsons of the founder, J.M. Clayton works the waters of the Chesapeake Bay, supplying crabs, crabmeat and other seafood, including Maryland's famous oysters, to restaurants, markets, and wholesalers all over the nation. It is the oldest working crab processing plant in the world and by employing 70 H-2B workers the company can retain over 50 full time American workers.

But its not just seafood companies that have a long history on the Eastern Shore. It's companies like S.E.W. Friel Cannery, which began its business over 100 years ago when there were 300 canneries on the Eastern Shore. But now those others are gone and Friel's is the last corn cannery left. Ten years ago, when the cannery could not find local workers, it turned to the new H-2B visa Program. It has used the program every year since, and many workers are repeat users who come each year and then go home after the season. What's important is that having this help each year has not only allowed the company to maintain its American workforce, but it has paved the way for local workers to return to the cannery.

Now these employers can't just turn to the H-2B program whenever they want seasonal workers. First, employers must try to vigorously recruit U.S. workers. These businesses try to hire American workers--they would love to hire American workers. In fact, the H-2B program requires these businesses to prove that they have vigorously tried to recruit American workers. They have to advertise for American workers and give American workers a chance to apply. They have to prove to the Department of Labor that there are no U.S. workers available. Only after that are they allowed to fill seasonal vacancies with H-2B visa workers. The workers that they bring in often participate in the H-2B program year after year. They often work for the same companies. But they cannot and do not stay in the U.S. They return to their home countries, to their families and their U.S. employer must go through the whole visa process again the following year to get them back. That means an employer must prove again to the Department of Labor that they cannot get U.S. workers.

This legislative fix keeps that visa process in place. It's a short- term legislative fix to solve the immediate H-2B visa shortage. It does not take the place of comprehensive immigration reform.

This legislation is a temporary 3 year fix. It exempts returning seasonal workers from the cap. These are workers who have already successfully participated in the H-2B visa Program. They received a visa in one of the past 3 years and have returned home to their families after their seasonal employment with a U.S. company.

Everyone must still play by the rules. Employers must go through the whole visa process, prove they need the seasonal help and only after that are returning employees exempt from the cap. Employees must be those who have left the U.S. and are requesting a new H-2B visa to come back for another season. This new system rewards those who have played by the rules, worked hard and successfully participated in the program. The bill gives a helping hand to businesses by allowing them to retain workers who they have already trained to do their seasonal jobs.

This is a quick and simple fix. It lasts three years. And it does not get in the way of comprehensive immigration reform.

I worked with my colleagues to get a bill with strong bi-partisan support. A bill that would work.

This bill is realistic. It provides a temporary solution because immediate action is needed to help these small and seasonal businesses stay in business. Yes--we need to help them now. Their seasons start soon. If they don't get seasonal workers this year, there may not be any businesses around next year to help.

Every member of the Senate who has heard from their constituents-- whether they are seafood processors, landscapers, resorts, timber companies, fisheries, pool companies or carnivals--knows the urgency in their voices, knows the immediacy of the problem and knows that the Congress must act now to save these businesses. I urge my colleagues to join this effort, support the Save our Small and Seasonal Businesses Act, and push this Congress to fix the problem today.

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

Mr. President, I rise today to introduce the Intelligence Community Audit Act of 2009, with Senators Carper, Durbin, Lautenberg, McCaskill, Sanders, and Wyden. This legislation reaffirms and clarifies the authority of the Comptroller General of the United States, as head of the Government Accountability Office, GAO, to audit and evaluate the programs and activities of the Intelligence Community, IC.

Our bill is not new. I have introduced similar bills twice before. But today, as I reintroduce this bill, I share with many of my colleagues a renewed commitment to accountability. This legislation would be an important step in that direction. GAO has well-established expertise that should be leveraged to improve the performance of the Intelligence Community. In particular, GAO could provide much needed guidance to the IC related to human capital, financial management, information sharing, strategic planning, information technology, and other areas of management and administration. By employing GAO's expertise to improve IC management and operations while carefully protecting sensitive information, this bill would reinforce the Intelligence Community's ability to meet its mission.

The Intelligence Community has faced greater demands and increased responsibilities over the past few years. It is Congress's responsibility to ensure that the IC carries out its critical functions effectively and consistent with congressional authorization. For too long, GAO's expertise and ability to engage in constructive oversight of the IC have been underutilized. This legislation would enhance, in a complementary manner, rather than detract from the work of the congressional intelligence committees. Dr. Marvin Ott, a former professional staff member on the Senate Select Committee on Intelligence, testified before my Subcommittee on Oversight of Government Management in February 2008 that the growth in the complexity, diversity, and size of the IC requires additional oversight resources. GAO is in a position to help. According to then-Comptroller General David Walker, who testified at the same hearing, GAO has the expertise and cleared personnel to increase the management oversight of the IC.

I also believe that safeguards need to be in effect to protect the IC's most

sensitive information from unauthorized disclosure. Under this bill, only the Senate Select Committee on Intelligence, the House Permanent Select Committee on Intelligence, and the majority and the minority leaders of the Senate and the House of Representatives would be able to request reviews of intelligence sources and methods or covert actions. Results of an audit of this nature would be restricted to the original requester, the Director of National Intelligence, and the head of the relevant IC element. Employees of the GAO participating in these audits would be subject to the same penalties for unauthorized disclosure or use of sensitive information as their counterparts in the IC. There are additional mechanisms in place to keep this information secure.

Congress and GAO have a crucial role in ensuring that the IC elements are fulfilling their responsibilities of protecting this country. By removing the barrier to more comprehensive oversight, this bill will help improve our national security.

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