care fraud crimes. we've taken bold steps to address the causes and consequences of the recent economic crisis. through the efforts of the president's financial fraud enforcement task force which was launched in 2009 and which i'm proud to chair, charges have been brought against numerous ceos, cfos, corporate owners, board members, presidents, general counsels and other executives of wall street firms, hedge funds and banks who have engaged in fraudulent activity. in recent months we have obtained prison sentences up to 60 years in a variety of fraud cases including multi-million dollar ponzi schemes and the largest hedge fund insider trading case in u.s. history. just this week we secured a conviction against the former board of directors chairman for an international bank for orchestrating a $7 billion investment fraud scheme. the task force established two new working groups, the consumer protection working group which will enhance civil and criminal

enforcement of consumer fraud and the residential mortgage backed securities working group which will bring federal and state partners together to investigate and prosecute abuses in our housing markets. both will help to amplify existing efforts and to foster cooperation and collaboration in the department's response to these problems. just a few weeks ago, a similar collaborative approach led the departments of justice and housing and urban development, as well as other agencies and 49 state attorneys general to achieve a landmark $25 billion settlement with the nation's top five mortgage servicers, the largest joint federal state settlement in our nation's history. although this will not on its own cure all that ails our housing market, this agreement builds on the record fair lending settlement obtained last year and will provide substantial relief to homeowners. it also provides a blueprint for future collaboration across levels of government, state borders and party lines. but there is perhaps no better

illustration of our recent progress than the department's groundbreaking work to combat health care fraud. over the last fiscal year alone in cooperation with the department of health and human services as well as other partners, by utilizing authorities provided under the false claims act and other essential statutes, we were able to recover nearly $4.1 billion in funds that were stolen or taken improperly from federal health care programs. that is the highest amount ever recorded in a single year. over the same period we opened more than 1100 new criminal health care fraud investigations, secured more than 700 convictions and initiated nearly 1,000 new civil health care fraud investigations. and for every dollar that we have spent combating health care flawed, we have returned about $7 to the united states treasury, the medicare trust fund andt my colleagues and i recognize that we cannot be satisfied, and this is no time to become complacent. that's why in addition to helping us build on this record

of success, the president's budget request also would bolster our fight against drug trafficking, international crime criminals, it would increase our efforts to protect the law enforcement officers who keep us safe and expand upon the work being done by our civil rights division to guarantee the rights of all americans are protected in border areas, workplaces, housing markets and voting booths. i am committed to building on these and our other many achievements. i know you understand in this time of uncommon threats and complex challenges, we simply amount and the quality of justice that we are obligated to deliver. the department must remain vigilant in protecting this nation and in enforcing the law. these efforts must be appropriately and adequately funded. i loers of this subcommittee and accomplish this.ave. >> thank you, mr. attorney general. your full statement will be entered into the record. as a matter of senatorial courtesy, we'll turn to senator

shelby who has a banking committee that he must join. i'll pick up followed by senator hutchison. we will recognize then members in order of arrival and follow the five-minute rule. senator shelby? >> thank you, madam chairman. good morning, mr. attorney general. >> good morning. >> two key department of justice facilities will soon be operating on red stone arsenal, the fbi's terrorist explosive device analytical center or tedac, and the a ncetar's national center known as ncetar, these two national assets will help law enforcement officials deal with the growing threat posed by terrorists in criminal use of powerful explosives. you and i have discussed these facilities previously. i believe you agreed then with me that the missions of ncetar and tedac are distinct but complimentary and that it made stone where there's a lot of

property, a lot of land. for the benefit of the committee, mr. attorney general, can you describe how the department. of justice will utilize ncetar and tedac. deals with the examination of afghanistan and other places. atf deals with -- i wouldn't want to call them the more common. >> more prevalent explosive devices. and i think that you're right, they you're right. they have fundamentally different responsibilities but her. and the location of them in that place i think makes a great deal of sense. could you describe the value of co-locating these facilities on a large federal arsenal with lots of range of space? >> yeah. >> there's a great deal of cross pollenation, the ability to talk to one other. although the purposes are distinct there are certainlygs

breakthroughs perhaps that you can exchange information by having people who are relatively close by.cies that are primarily responsible for explosives determination and prevention and having them close by even though they have distinct r. it's good to have them there and talking to one another. >> also, you're aware of this, there near red stone has one of the highestof smart people there, that's true. >> you plan to utilize that? >> we'll use smart people wherever we can find them. there are a lot there. that is fair. >> well, let's go into another attorney general holder, the justice department is seeking funds this year to activate a new women's prison in alabama. this prison was designated as a female only facility based on input from your department. it costs nearly a quarter of a

does the department plan to activate this soon? i know you've got a lot in it. your u.s. bureau of prisons said that was one of their top priorities. >> we want to activate it. it was specially designed to deal with the unique needs that female prisoners have. we have the needed -- we have a -- we need to expand our capacity to handle female prisoners in the federal system. was specially configured for female prisoners, it would be our hope to activate it as quickly as with can and for the use for which it was designated. >> you've got a lot in it. it's finished, and i hope you would do that soon because to acti costs to build. >> no. i don't disagree with that. the need is clearly there for the expanding population unfortunately that we see in the federal prison system. >> be a priority for you in that area? >> we want to bring online as many of these facilities as we can. this is one that as i understand it is extremely close -- just

about ready to open soon. >> madam chairman, thank you very much for taking me out of order. i appreciate it very much. >> mr. attorney general, i have two questions. they actually -- i have many. but we'll submit them for the record. first of all, federal prisons. as i look at the department's budget, almost one-third of the justice department money is going in to federal prisons. that amount is now at $6 billion, and it is rapidly approaching almost what the fbi budget is which is $8 billion. now, my question is, what's going on with federal prisons? if people are incarcerated -- first of all, we want the bad guys and gals off the street. so we want you to prosecute and incarcerate particularly where

there are people who constitute a danger to our country or to our communities. we -- i don't know if we can sustain this growth. and then i'm concerned about once we put them in, it's a resolving door and we keep expanding their prisons with the same people. they keep coming back. could you elaborate on your department's needs, but is there any recommendations you'd have to begin to contain the prison population? are we federalizing too many crimes? is recidivism the problem? again, safe streets, but this is really an ever-increasing part of our appropriations. >> i think there are a whole variety of reasons why we see the prison population expanding. we now have about 215,000 or so people in the federal system. that number goes up every year. it is for that reason that we consistently come back to this

committee asking for additional funds for b.o.p. i think there are a variety of reasons you see people coming into the system. we're good partners with our state and local counterparts and try to help them to the extent we can. and so some cases that violate both federal law and state law, and if they have very serious criminals, we bring into federal system if there are evidentiary rules or more harsh sentences that we can give to them. but i think the point that you hit on is something that we really need to focus on is how can we rehabilitate people so that we cut down on recidivism rates. one of the things we talked about is the second chance act, coming up with ways in which we make available to people reentry possibilities so that they have the chance of not being recidivists, coming up with educational, vocational, drug treatment programs while we have them in prison. we've actually seen i think pretty good success being done by some state systems that has been shared with me by the pew research foundation. i think we can learn a lot from

them in that regard. >> mr. attorney general, we would really look forward to specific recommendations where again we want our local and federal law enforcement to prosecute and get bad people off the street, whether they're terrorists or whether they're terrorizing a neighborhood like some of the drug dealers in some of my own communities in maryland. at the same time we don't want our federal prisons to be an incubator for more crime, where the lessons they learn when they go to prison is not to commit crimes again, but how to be better crooks. we want our prisons to teach them how to be better citizens and then to come back to a community support system where they don't fall back into the behavior that got them. so i'm concerned that our

federal prisons are such that we really need to take a look and evaluate and learn some of these lessons. so we want to work with you. i know we feel that way. you're very experienced in street crime which takes me to the other. ultimately while you've done this fantastic job of fighting terrorism, keeping america safe, it's been stunning what our national security services have accomplished, both military and civilian. neighborhoods. we have communities that faced crime every single day and when you talk to our local law enforcement, our local prosecutors' offices and so on, they feel they're under the gun. they need burn grants, cops on the beat and so on. do you feel that this is sufficient funding? years -- in 2010, we had $3.7 billion that went into state and local grants due to acts of congress and so on.

now we're down to $2 billion. yet everywhere i go in maryland from our l commissioners to local district as they're called in my state, people say we need those justice department grants. they either give us better technology, they give us tools to deal with violence against women. they express gratitude for the lethal index. they need you. they love having you as a partner. do we have enough money in the right places to do the job to protect our communities? request, $2.04 billion for state and local assistance programs, $1.4 billion for office of justice programs, about $290 million for cops and about $412 million for the office on vi equal to the level we requested last year. it is lower than the numbers you had said. but i think that given the budget realities that we face, the amount that we have requested is strong on law enforcement. it's strong for science, strong for victims.

would i like to have more money? yes. but the reality, the budget realities that we confront and the needs to stay within a but i think that through the provision of this money, through the technical assistance that we can also provide to our state and local partners, we can i think do the job. i met with the association of attorneys general just this week. i think the partnership we have is an unprecedented one. and i think the combination of that partnership, the sensitivity i think we have to we're seeking here will allow us to be good partners. >> we have many questions. i'm going to turn to senator hutchison. what i would find very helpful is two things. one, if you look at your burn grants, cops on the beat and so on, what wasal people to apply for those grants and what could you fund? i'd like that for the record. the second thing is the gao

report raises issues related to i would like to have your reaction to the gao report on how we can streamline, get more efficiencies. i think you're already on that road. let me turn to senator hutchison. >> thank you, madam chairman. mr. attorney general, wel have questions for the record, but i wanted to pursue this public integrity unit's misconduct against senator stevens. the court appointed council after you moved to dismiss the case, the court appointed council to investigate the botched prosecution of senator stevens and found the prosecutors engaged in systematic concealment of evidence, but they were not guilty of criminal contempt. according to the summary that was put out in the public, the

full report coming later, it said that the court said despite findings of widespread and at times intentional misconduct, the special counsel, mr. schulke recommended against contempt charges because prosecutors did not disobey a clear and required under law.view of docket and proceedings in the stevens case, mr. schulke concludes no such order existed in this case. whether the court accepted the repeated representations of the subject prosecutors that they were familiar with their discovery obligations were complying with those obligations and were proceeding in good faith. my question to you is, does it concern you that the only reason these prosecutors escaped criminal charges is that the didn't file an order specifically telling the orders that they should follow the law? >> i think we have to take into

account a variety of things. when i was made aware of the issues that led to the inquiry that judge sullivan ordered, i made sure -- i ordered that the case be dismissed. i also ordered an office of professional report be done as an internal justice department which has now been completed, it is now in its final stages of being worked through. >> will it be made public, mr. attorney general? >> i'm hoping we can. there are privacy interests that we have to deal with. but my hope is to get that report -- as much of the report made public as we possibly can. it is an exhaustive study, it is hundreds of pages long. i think the people at opr have done a good job and there are recommendations with regard to sanctions that ought to be made. i'm hoping we will make that available. >> i'm going to request that you do. >> okay. the report -- i'm not really at liberty to discuss the report that mr. schulke did. we have gotten a limited number of those reports in the justice department, 10 or 15.

and we're under orders by the judge not to discuss those. certainly the summary and in portions of it and some of the findings that are made there are disturbing. they were disturbing when i made the decision to dismiss the case. we have done a lot i think since that time to come up with ways in which we try to prevent those kinds of mistakes from happening again. we have an extensive training program. we have hired somebody who is responsible as a coordinator to make sure that discovery in criminal cases and civil cases, that the justice department is involved in, so we don't fall back into those same kinds of errors. we have talked to -- i have spoken to members of the judiciary, all to make sure that what happened in the case involving senator stevens is not replicated. but i would urge everybody to understand that this justice department, this attorney general, when we made that determination that mistakes had occurred, took the extraordinary step of dismissing the case.

>> which i gave you full credit for. now, let me ask you, four of the six prosecutors according to reports who were investigated opposed releasing the report and their names have been redacted. i want to ask you if any of those prosecutors are still in the justice department system? >> i have to check that just to nvolved in that case are still in the department. i believe that's true. i'm not totally sure on that. >> does that trouble you that there would be findings of area that they would still be -- that you would not let them go outside of our justice system?he nature of the misconduct, what it is that they did, the mistakes that were ma i think one has to look at the schulke re be released combined with the opr report and the recommendations for sanctions that are contained in exactly should happen to t was the incident an isolated one. how serious was it? to do that, mr.

attorney general? are you going to make a decision regarding people who have clearly exhibited that they do not have the integrity to prosecute in this sensitive area? will you tell the committee what your actions are whe >> the actions that we take -- i don't think there's any privacy act interest that prevents us from sharing with the public with this ave ultimately decided to take against those people who are found to have been culpable. the committee. thank you, madam chairman. >> senator brown? >> thank you, madam chair. think, general, for your service. you established a new residential mortgage backed securities working group. thank you for that. i want to talk in a moment about that. but last week phil angelides from senator feinstein's state, former chair of the financial crisis inquiry commission observed that what -- the number of lawyers, some 55 lawyers,

investigators and other staff of the working group i just mentioned, that this is far fewer than the hundred law enforcement professionals dedicated to the dallas bank fraud task force during the savings anlso suggested -- mr. angelides also suggested congress should extend the statute of limitations for financial institutions fraud from five years to ten years as congress did in 1989 when it passed the federal institutions reform recovery and enforcement act after the savings and loan crisis. you, of course, are aware of the public sentiment of anxiety, frustration, outrage, pick your noun, towards the fact that so few people have been prosecuted. group, the dollars you're dedicating of the $55 million increase you're asking for, is it comment if you would on mr. angelides' recommendation that the statute of limitations, similarly 20 years ago if not in a similar scandal, surely a scandal when it was lengthened

to ten years by congress then, if that's something we should do? >> i would say first off, this whole mortgage fraud problem scandal that we are dealing with is something we've taken extremely seriously. we brought charges against about 2100 people last year, all over the course of the last few years in connection with the mortgage problem. the number of people, i guess you mentioned 55 f personnel to go to this, the rnbs task force, that's the federal component. one of the things i think is unique about that is we're working with our state and local partners, and in particular, state attorneys general. the number of people ultimately devoted to that task force i think will be substantially greater than that. i suspect we will also be adding people from various u.s. attorneys offices around the country. we're looking at ultimately four or five that will be involved. so i think that number will bers of people to do the job we need to do with regard to the residential mortgage backed securities

working group. with regard to the extension of the statute of limitations, i e than glad to discuss with members of this committee after i've had a chance to speak with the prosecutors on the ground to zoo if, in fact, that that is something that we need. we want to use all the tools that we have and also consider any possibilities that we might want to acquire so that we can hold accountable the people and institutions who really had a devastating impact on our nation's economy and continue to have a lingering effect on our nation's economy and in particular the housing market which drags down the recovery. >> thank you for that.ur office on the wisdom, hearing from your prosecutors that might be in the middle of initiating these cases or in the middle of these cases, the importance of that extra five years in the statute of limitations. let me talk for a moment about gas prices. you know, oil prices are well over $100 per barrel.

doe and cftc have told us inventories are sufficient, domestic production is up, the number of rigs has grown, the consumption is down, all reasons that gas prices should not be going up, understanding the turmoil in the middle east and the discussion of it's my understanding that over -- some analysts have added speculation may be adding 50 cents to the price per gallon of gas. it's my understanding doj organized the oil and gas price fraud working group to determine the role of speculators and the potential price manipulation are having on the price of gasoline. what have you found? what are your next steps? what can we expect? >> that working group continues in effect. in fact, they're having a call today to discuss the situation in which we find ourselves with regard to these rising gas prices and the committee -- that working group itself will be meeting before the end of this week. the work of that committee or

that group has been on going and looking to see if there are inappropriate manipulations of the market. the ftc is also working in this area. i don't want to speak for them. i understand they're working on a report of some sort we should be seeing i believe relatively soon. but that, is again, the ftc working independently of us. but within the department, that oil and gas working group has been active, and as i said, has a call today and a meeting that i think will happen by tomorrow. >> i would like to request that after that meeting today or tomorrow, after the phone call and after meeting today or tomorrow that task force brief me and other members of the subcommittee that have expressed an interest. >> all right. to the extent we can, we will certainly do that. >> mr. attorney general, we really would like to see that. this is very, very, very important. we would now like to turn to senator murkowski. >> thank you, madam chairman.

mr. attorney general, welcome this morning. i want to follow on to senator hutchison's questions regarding the prosecution of senator ted stevens. i think so many of us were absolutely shocked. we were -- i was horrified as a friend and as an alaskan to read judge sullivan's comments that this ill-gotten verdict not only resulted in the loss of senator stevens losing his seat but in his words, tipped the balance of power in the united states senate. pretty powerful in terms of what the department of justice did to a great man. i appreciate and i recognize and i thank you for your actions in dismissing that case and in your retry, and i join senator hutchison with that. there are questions that still remain. you know that. i have a long series of them. what i would like to do is

submit them to you today and ask that you respond to them prior to the release of the report which is due to come out next wednesday, the 15th of march. i would appreciate your attention to that. i have a question regarding what is happening now with the release of this report. the "usa today" reported that the department of justice has spent $1.8 million in defending prosecutors from allegations that they broke the law in the stephens prosecution, and senator grassley was one who mentioned that i amount of money being spent by the taxpayers to defend what appears to be egregious misconduct and, again, senator hutchi