[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
               FEDERAL BUREAU OF INVESTIGATION (PART III) 

=======================================================================

                                HEARING

                               BEFORE THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 16, 2008

                               __________

                           Serial No. 110-206

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov

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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            STEVE CHABOT, Ohio
MAXINE WATERS, California            DANIEL E. LUNGREN, California
WILLIAM D. DELAHUNT, Massachusetts   CHRIS CANNON, Utah
ROBERT WEXLER, Florida               RIC KELLER, Florida
LINDA T. SANCHEZ, California         DARRELL ISSA, California
STEVE COHEN, Tennessee               MIKE PENCE, Indiana
HANK JOHNSON, Georgia                J. RANDY FORBES, Virginia
BETTY SUTTON, Ohio                   STEVE KING, Iowa
LUIS V. GUTIERREZ, Illinois          TOM FEENEY, Florida
BRAD SHERMAN, California             TRENT FRANKS, Arizona
TAMMY BALDWIN, Wisconsin             LOUIE GOHMERT, Texas
ANTHONY D. WEINER, New York          JIM JORDAN, Ohio
ADAM B. SCHIFF, California
ARTUR DAVIS, Alabama
DEBBIE WASSERMAN SCHULTZ, Florida
KEITH ELLISON, Minnesota

            Perry Apelbaum, Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel







































                            C O N T E N T S

                              ----------                              

                           SEPTEMBER 16, 2008

                                                                   Page

                           OPENING STATEMENTS

The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Chairman, Committee on the 
  Judiciary......................................................     1
The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Ranking Member, Committee on the Judiciary.     2
The Honorable Jerrold Nadler, a Representative in Congress from 
  the State of New York, and Member, Committee on the Judiciary..     3
The Honorable Robert C. ``Bobby'' Scott, a Representative in 
  Congress from the State of Virginia, and Member, Committee on 
  the Judiciary..................................................     4
The Honorable Louis Gohmert, a Representative in Congress from 
  the State of Texas, and Member, Committee on the Judiciary.....     5

                               WITNESSES

The Honorable Robert S. Mueller, III, Director, Federal Bureau of 
  Investigation
  Oral Testimony.................................................     7
  Prepared Statement.............................................    11

                                APPENDIX

Material Submitted for the Hearing Record........................    49


                    FEDERAL BUREAU OF INVESTIGATION 
                               (PART III)

                              ----------                              


                      TUESDAY, SEPTEMBER 16, 2008

                          House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 10:17 a.m., in 
Room 2141, Rayburn House Office Building, the Honorable John 
Conyers, Jr. (Chairman of the Committee) presiding.
    Present: Representatives Conyers, Nadler, Scott, Lofgren, 
Waters, Delahunt, Sanchez, Cohen, Davis, Ellison, Smith, Coble, 
Goodlatte, Lungren, Issa, King, and Gohmert.
    Staff present: Robert Reed, Majority Oversight Counsel; 
Caroline Lynch, Minority Counsel; and Renata Strause, Majority 
Staff Assistant.
    Mr. Conyers. Good morning, ladies and gentlemen.
    We welcome Robert Mueller, our FBI director, to yet another 
hearing which he has graced us with his presence.
    The Federal Bureau of Investigation is the anchor of our 
Nation's Federal law enforcement and has the important 
responsibility of not only combatting crime, conducting 
surveillance, initiating investigations but now have the 
responsibility of dealing with the issue of terrorism on top of 
all their other existing duties.
    We appreciate the Bureau's efforts to get us answers on our 
letters, particularly the September 5 letter.
    Director Mueller, we are trying to get a proposed copy of 
the Attorney General FBI guidelines. We are trying to identify 
what specific safeguards will prevent improper undercover FBI 
spying against domestic groups and citizens, abusive 
investigation techniques like pretext interviews; and improper 
racial and ethnic profiling.
    I would also like a statement as to whether the guidelines 
of former Attorney General Edward Levy to protect against 
improper invasions of privacy were rescinded by former Attorney 
General Ashcroft and, if they were, will they be reinstated?
    We have numerous questions on the anthrax issue, and we 
need an explanation of the improper collection of reporters' 
phone records and what disciplinary action will be taken for 
the FBI's improper collection of reporters' phone records and 
abuses, particularly concerning exigent letters and national 
security letters.
    And, finally, we need to know how many FBI agents were 
devoted to mortgage fraud issues before and after a top FBI 
official warned about this problem back in 2004. Included in 
that is, of course, an explanation of why fewer resources were 
devoted to mortgage fraud after the 2004 warnings.
    So that is all we want to know, and that is why we welcome 
you here this morning.
    I would like now to turn to the distinguished Ranking 
Member of House Judiciary Committee Lamar Smith of Texas.
    Mr. Smith. Thank you, Mr. Chairman. And, Mr. Chairman, your 
opening statement did pretty much cover the entire arena, I do 
believe.
    Director Mueller, thank you for appearing again before the 
Judiciary Committee. We appreciate your willingness to do so.
    Mr. Chairman, on Thursday we observed the seventh 
anniversary of the tragic events of September 11, 2001. As a 
Nation, we also breathed a sigh of relief that in 7 years we 
have not had a single foreign terrorist attack on American 
soil. That fact is not an accident and does not reflect a lack 
of effort on the part of our enemies. Many plots have been 
prevented.
    I would like to congratulate Director Mueller and all the 
dedicated men and women he leads for him tremendous work in 
keeping this country safe. Due to his leadership and the 
tireless efforts of the men and women of the FBI, the 
Department of Justice and many others throughout the Federal 
Government, the Nation has enjoyed a level of safety that, in 
all honesty, most of us feared unlikely in the immediate 
aftermath of those attacks.
    After September 11, the Bureau became the primary 
investigative agency tasked with not only investigating a crime 
after it has been committed but also with investigating 
terrorism and national security threats to prevent another 
catastrophic attack on our country.
    This fundamental shift in duties is much easier said than 
done. It has required the Bureau to reshape its goals, how its 
trains its agents and its investigative techniques. It also has 
required the Bureau to break down the layers of bureaucracy to 
effectively collect, analyze and act on intelligence.
    The Bureau and the Justice Department have been careful to 
review practices and procedures in order to ensure the 
strongest tools are available to prevent future terrorist 
attacks. And while I commend your many strides in this 
direction, we both agree that these efforts must continue.
    Recently the Bureau and the Department of Justice informed 
Congress of their work to revise the Bureau's investigative 
guidelines so that the tools available for criminal 
investigations would also be available when assessing potential 
terrorist threats.
    While the FBI continues its work to become a prevention-
focused institution, it is also important that it continues to 
investigate traditional and newly emerging crimes, including 
public corruption, gang violence, mortgage fraud and white-
collar crime, child exploitation and intellectual property 
theft.
    Protecting our Nation from those who wish to do it harm, 
whether through acts of terrorism, violent crime, crimes 
against our children or other criminal enterprises, requires 
constant vigilance. It requires the FBI and Congress to remain 
at least one step ahead of the criminals themselves.
    Finally, I would like to congratulate the Bureau on 100 
years of service to the American people. During the past 
century, FBI agents have investigated our Nation's most serious 
crimes and handled high-profile cases, including investigations 
into the Oklahoma City bombing, the Unabomber, Al Capone, 
Bonnie and Clyde, Nazi spies, Robert Hanssen and Enron.
    The success of the FBI is not the result of people simply 
doing their jobs. As new threats develop, law enforcement 
officials are constantly charged with finding new methods to 
combat these threats. Americans have never needed the FBI more, 
and today, after 100 years of service, we continue to be 
grateful for the FBI and all that it has done and is doing to 
protect us.
    I thank you, Mr. Chairman, and I will yield back.
    Mr. Conyers. Thank you.
    The Chair recognizes the distinguished Chairman of the 
Constitution Subcommittee, Jerry Nadler, of New York.
    Mr. Nadler. Thank you, Mr. Chairman.
    Director Mueller, I appreciate you being here to testify 
before the Judiciary Committee once again.
    As you saw from the September 5 letter that the Chairman 
and Mr. Scott and I sent, as a Committee, we have many issues 
to discuss with you. These topics include how the FBI handled 
the anthrax investigation, whether the FBI has been vigilant 
enough in fighting mortgage fraud and the new Attorney General 
Guidelines regarding the FBI.
    As you may recall, we asked for written responses in 
advance of the hearing. Unfortunately, we did not receive that 
response until last night, and not having those answers until 
just before today's hearing makes meaningful oversight much 
more difficult. The executive branch and the American people 
benefit when Congress is exercising its constitutional 
responsibility to conduct oversight.
    In particular, we are very interested in discussing the new 
guidelines regarding the FBI. I am sure Members will be asking 
many questions about them. Since we have not yet been given the 
actual text of the guidelines to keep and review, here again, 
the Committee's oversight role is unnecessarily more difficult. 
And I must, at this point, register my displeasure with the 
decision by the FBI to show the guidelines to staff but not to 
allow them to keep a copy or not to allow the Committee to see 
it.
    These guidelines are not secret, they are going to be 
public in a few weeks, and I don't understand how it serves the 
purposes of open government to keep from the Committee to this 
moment guidelines that are going to be open in public in a few 
weeks as if it is the purpose of the FBI to make sure that the 
Committee doesn't have enough information to ask intelligent 
questions before they go into effect. I am sure that is not the 
purpose. Perhaps you will tell us what the purpose of that 
secrecy policy is.
    From what I know about them, I am very concerned about the 
expanded authority being given to FBI agents. The ability to 
conduct physical surveillance, conduct pretext interviews, and 
so forth, in terrorism investigations without having to suspect 
a crime has occurred and without getting the approval of a 
supervisor leaves room for racial profiling and other forms of 
discriminatory treatment.
    We have seen problems before when we gave too much 
authority to the FBI with respect, for example, to the national 
security letters. Two Department of Justice IG reports detailed 
widespread abuses. Peoples' private information was improperly 
accessed by the government, and almost everyone who receives an 
NSL is gagged from talking about it, a potential violation of 
the First Amendment.
    I don't think the FBI has demonstrated that it is using its 
expanded NSL authority appropriately. There is legislation that 
I have introduced which would address these problems. Among 
other provisions, it would reform NSL's and better protect 
American civil liberties and constitutional rights.
    I also would like to discuss the FBI's investigation into 
the anthrax case. Many serious questions have been raised about 
the arguments and evidence the FBI has shown. These questions 
have not been answered, and many outstanding issues remain. I 
am glad you are here this morning so we can get some answers.
    With that, I want to again thank Director Mueller for being 
here. I look forward to hearing his testimony and his answers 
to questions.
    I thank the Chairman.
    I yield back the balance of my time.
    Mr. Conyers. Thank you.
    The Chair recognizes a Member who has worked on the issues 
of crime in this Congress and in the country for many years. He 
is Bobby Scott of Virginia, and we recognize him and yield to 
him now.
    Mr. Scott. Thank you, Mr. Chairman.
    And thank you, Mr. Director, for appearing with us today. 
There are a number of questions, and the format we have is 
insufficient to get into an in-depth dialogue on all the issues 
that we want to get into, so we will just mention those and, 
hopefully, we will get many of the responses in writing from 
you on the issues.
    In addition to those articulated by the Chairman of the 
Constitution Subcommittee, there are several others that we 
would like to get a status report on, one of which is the 
contractor abuse. There apparently are billions of dollars 
unaccounted for in Iraq, and we understand that there are some 
investigations going on as to whether or not crimes were 
committed as a result of that, and hopefully we can follow up 
on that.
    As you know, another issues involves torture and prisoner 
abuse. It is my understanding that the FBI has been fairly good 
on this issue, having a protocol that does not allow agents to 
torture, but there seems to be some evidence that agents were 
there when others were not so restrained, and we would like 
some information on that.
    On background checks, the FBI database, according to a 2006 
Department of Justice report, indicated that for approximately 
50 percent of the records, the final disposition information 
was not there so that a person who was arrested would have the 
arrest show up on the record but the subsequent exoneration 
would not show up on the record. We would like to see what we 
are doing or what we need to do to make sure the background 
check information is as up to date as possible.
    On the mortgage fraud issue, obviously, today and yesterday 
it is a very high priority. Trillions of dollars, obviously, 
being lost in the stock market as a result of potential crimes 
that have been committed and mortgage fraud. If money has been 
lost, somebody has made the money, and we want to find out what 
progress has been made on mortgage fraud.
    On identity theft, when we passed the Identity Theft 
Penalty Enhancement Act several years ago, we allocated $10 
million to the department to track down identity theft and be 
interested to know what kind of progress we are making on that.
    Over the weekend ``60 Minutes'' reported on a problem in 
laboratories involving ballistic tests--the reliability of some 
ballistics tests--and suggested that there may be some in jail 
today based on tests that have subsequently been found not to 
be reliable. We would like to see what we are doing to make 
sure that justice prevails in that situation.
    Finally, two other issues. We have had many complaints 
about crimes being committed by United States persons over in 
Iraq, and jurisdiction and who would prosecute such crimes has 
been the issue. Has the FBI actually followed through, 
investigated and prosecuted crimes that are committed by U.S. 
persons abroad?
    And, finally, in the civil-rights area, does the FBI have 
jurisdiction and an interest in voter-fraud cases. For example, 
if registrars are illegally discouraging voters from 
registering, does the FBI have jurisdiction over those kinds of 
cases.
    Look forward to your responses, either here today or in 
writing later, to those issues and the ones that the gentleman 
from New York mentioned.
    And with that, I be appreciate, Mr. Chairman, the 
opportunity to be here today and yield back the balance of my 
time.
    Mr. Conyers. Thank you, Chairman Scott.
    I am now pleased to recognize Mr. Louis Gohmert of Texas, 
the Ranking Member on the Crime Subcommittee.
    Mr. Gohmert. Thank you, Mr. Chairman.
    And thank you, Director Mueller, for being here today.
    Yesterday we passed a bipartisan resolution congratulating 
the FBI on 100 years of service. The FBI, obviously, was born 
out of a very difficult time in this Nation's history, and here 
we are 100 years later reliant so heavily on the FBI, and we 
truly do appreciate the hard work and the dedication of the men 
and women of the FBI.
    Since the 2001 terrorist attacks, the FBI has had the 
difficulty of balancing their traditional criminal 
investigations with new responsibilities, conduct national 
security and counterterrorism investigations, and that 
certainly has not been a simple task. Unfortunately, we 
continue to hear about mistakes or misuses by the FBI of 
investigative authorities, particularly within the area of 
national security.
    We know from the IG's 2007 report that on 739 occasions the 
FBI obtained telephone toll billing records or subscriber 
information from three telephone companies without first 
issuing NSL's or grand jury subpoenas. We know these exigent 
letters were signed by the FBI headquarters' Counterterrorism 
Division, personnel who were not authorized to sign NSL's. We 
have heard testimony here and also have heard from other 
sources about how badly undermanned the Counterterrorism 
Division may be and that it is a very difficult assignment that 
most do not relish the idea of having to go serve in.
    We know that the personnel regularly issued NSL's seeking 
electronic transactional records exclusively from control 
files, rather than investigative files, which is a practice not 
permitted under FBI policy. But what we didn't know until 
recently is that exigent letters were issued in 2004 on four 
reporters for The New York Times and The Washington Post 
stationed in Indonesia.
    Personally, I have had concerns about The New York Times 
releasing classified information and whether or not some laws 
may be violated, and that it may be appropriate to do a 
thorough investigation of how that all came about, but still we 
have to utilize legal bases to go after such an investigation. 
As we talked about in a prior hearing, when law enforcement 
breaks the law, who has authority to raid their offices? Who 
has authority to get a subpoena and go look at records there in 
those offices?
    It is my understanding that, following the 2007 IG report, 
the FBI, under your leadership, Director, had ceased use of 
exigent letters altogether. It is troubling to continue to hear 
about issues that arise, we think we have dealt with them and 
then something else come up. And as you now talked about, I 
continue to wonder if some of these issues arise as a result of 
the 5-year-up-or-out policy that has forced, under some 
accounts, thousands of years of experienced staff to leave, 
rather than being willing to come to Washington at the end of 
your 5-year term.
    I have been concerned about this policy for sometime. I 
thought it was hundreds, but there has been information 
recently we have lost thousands of years of experience.
    And I look at the director of the FBI: Would I want someone 
serving there with a cornucopia of experience that you have as 
a servant of this Nation, or would I want somebody with 6 
years' experience? I know which I would want, and I would love 
to have that go back to being the policy in the local offices 
as well.
    In any event, Director Mueller, knowing your background--
you are a patriot, you are a hero, you truly have a servant's 
heart to protect this country, and we appreciate that. I know 
you care deeply, but I also know that some of the seasoned 
agents--well, the seasoned agents that we have lost also felt 
the same way about this country. They love it as well.
    But I look forward to hearing your thoughts on these 
issues. Hopefully, we can address them so these don't keep 
coming up, and I thank you for your appearance here today.
    Thank you.
    Mr. Conyers. Thank you, Judge Gohmert.
    We are pleased to have Robert Mueller, III, director of the 
FBI since September 4, 2001. He has had a long career in public 
service and in the law as well. He has been an assistant United 
States attorney in San Francisco and in Boston and in 
Washington, D.C. He served as assistant attorney general for 
the Criminal Division in the early 1990's, returned to San 
Francisco in 1998 as a United States attorney and has also been 
in private practice on at least two occasions with prominent 
national law firms. He was called back from San Francisco to 
Washington in early 2001 to be acting deputy attorney general, 
where he served until assuming his current post.
    Once again, we welcome you to the Committee.

 TESTIMONY OF THE HONORABLE ROBERT S. MUELLER, III, DIRECTOR, 
                FEDERAL BUREAU OF INVESTIGATION

    Mr. Mueller. Good morning, Chairman Conyers, Representative 
Smith and Members of the Committee. I am indeed pleased to be 
here today to answer your questions.
    When I have come before the Committee in the past, I have 
discussed the FBI's transformation, and I have recounted our 
many, what I believe to be, improvements and accomplishments. 
Marking milestones is about more than looking backward, it is 
also about looking forward. So today I want to focus on what 
the FBI is doing and will continue to do in order to ensure 
that we serve the American public for the next 100 years.
    In the interest of time, I will focus on four specific 
areas: intelligence, technology, human capital and the new 
Attorney General Guidelines, to which you have alluded. By 
giving attention to these and similar areas, we will be 
prepared to confront the threats of the future, from mortgage 
fraud to terrorism, from crimes against children to violent 
gangs.
    First, intelligence. Intelligence is crucial to every 
investigation and operation that the Bureau undertakes. The FBI 
has always excelled at gathering intelligence, even if we did 
not always call it that, and utilizing that intelligence--those 
facts--to build cases that led to courtroom convictions.
    After September 11, we realized that we also had to 
strengthen our intelligence analysis and sharing. I have 
discussed our efforts in great detail in the past, from ramping 
up, hiring and training of intelligence analysts to 
establishing the Directorate of Intelligence and then the 
National Security Branch at headquarters.
    But intelligence gathering does not happen in headquarters, 
it happens out in the communities we serve. And so each field 
office established a field intelligence group made up of 
agents, analysts, linguists and surveillance specialists. These 
are the operational arms of our intelligence program and 
crucial as well as--and crucial to their efforts are our 
partnerships with other Federal, state and local agencies.
    Their work is not limited to counterterrorism threats. For 
instance, field offices near research universities or defense 
contracting firms are also focusing on potential espionage or 
proliferation threats. Offices along the Southwest border are 
focusing on violent transnational gangs. And our offices around 
the country, from large cities to rural areas, are concerning 
themselves with violent crime.
    To accelerate our improvements in our intelligence 
capabilities, we established what we call a Strategic Execution 
Team to help us assess our intelligence program, evaluate best 
practices, decide what works, what does not work and then 
standardize it across the Bureau. And that effort continues and 
has been integral to the FBI's effort as a full partner in the 
wider intelligence community.
    We regularly share intelligence with our partners in more 
than 18,000 state and local law enforcement agencies around the 
country. We also collaborate closely with our international 
counterparts, and as the world continues to flatten and threats 
continue to migrate across borders, it is more important than 
ever for the FBI to be able to develop and disseminate 
information that will assist our partners.
    Second, we have made substantial progress in replacing and 
transforming the FBI's information technology systems to help 
us confront current threats and mission needs. Sentinel, a Web-
based case-management system designed to support both our law 
enforcement and intelligence mission, is progressing on time 
and within budget. The first phase was successfully deployed in 
June, and the remaining phases will continue to deliver 
additional capability through the end of the program in the 
summer of 2010.
    We have also expanded our desktop Internet access to over 
19,000 agents, analysts, task force and support personnel, and 
when completed, we anticipate approximately 39,000 desktops 
will have been deployed at all FBI locations.
    In addition we have deployed over 20,000 BlackBerrys that 
have e-mail Internet browsing and custom features, and we are 
deploying other information technology systems that will 
dramatically enhance our ability to efficiently carry out our 
mission.
    Third, as you know, we have been hard at work continuing to 
build a strong human resources program to ensure we have 
optimal recruiting, hiring, training and retention for our 
employees. Historically, the FBI has attracted recruits from 
law enforcement, legal, military communities, particularly to 
fill our special-agents ranks, and this has served us well as a 
law enforcement agency. But as we have developed into a 
national security organization, we also require employees with 
specialized skills: intelligence analysts, scientists, 
linguists, computer experts.
    We are strengthening our relationships with universities as 
a primary source of recruiting individuals who want to build a 
career in national security at the FBI. We are conducting a 
separate targeted intelligence hiring initiative to bring 
hundreds more intelligence analysts on board. Our programs are 
modeled after successful programs in other intelligence 
agencies, as well as in corporate America.
    We have worked hard to develop and provide more training 
opportunities for employees at all levels, and we are focused 
not just on building isolated skills but on building a culture 
of leadership.
    The FBI has always been fortunate to have tremendously 
talented leaders. Many of them rose through the ranks of the 
Senior Executive Service, some were recruited from outside the 
FBI, and others simply led from whatever position they held. 
But we cannot have leadership on an ad hoc basis. We must 
continue to have an ethos of leadership at levels.
    Fourth, while our employees are collecting, analyzing and 
sharing intelligence under an improved internal framework, they 
will also be operating under new investigative guidelines.
    Let me spend a few moments discussing the new Attorney 
General Guidelines for domestic FBI operations, which are in 
the process of being finalized and which have been briefed to 
your staff. With the input of this Committee, it is my hope and 
expectation that we can make these guidelines effective for 
agents operating in the field in the near term.
    Up to now, special agents have depended on several sets of 
guidelines to guide their investigations. Each set was tailored 
to a particular program area and, therefore, different rules 
governed different types of investigations. These differences 
were especially pronounced for national security investigations 
versus criminal investigations.
    To give you a few examples, in the guidelines governing 
national security investigations prohibited recruiting or 
tasking sources unless the FBI had at least a preliminary 
investigation open. They also prohibited physical surveillance 
other than casual observation, while the general crimes 
guidelines, which governed other criminal investigations, did 
not contain these limitations. So, ironically, in my cases an 
agent could readily use physical surveillance to watch a 
suspected smuggling route for drugs or counterfeit blue jeans 
but not for a terrorist bomb.
    In the past these rules may have been sufficient and 
appropriate to the threats they were meant to address, but 
criminal threats and national security threats do not now fall 
neatly into separate categories. The threat of today and of the 
future is a dangerous convergence of terrorists, hostile 
foreign governments and criminal groups operating over the 
Internet and through interconnected sophisticated networks.
    We may see organized crime laundering money for drug 
groups, drug groups selling weapons to terrorists, terrorists 
committing white-collar fraud to raise money for their 
operations and, most threatening of all, hostile foreign 
governments arming terrorists with an arsenal of biological, 
chemical or radiological weapons.
    Different rules should not apply depending on how the agent 
decides to describe what he or she is investigating.
    I must emphasize that the new guidelines are not designed 
to give the FBI any broad new authorities. The new guidelines 
will--the last vestige of the wall separating criminal and 
national security matters. They will replace five separate sets 
of guidelines with a single uniform set of rules to govern the 
domestic activities of our employees.
    They set consistent rules that apply across all operational 
programs, whether criminal or national security. They will give 
us the ability to be more proactive and the flexibility to 
address complex threats that do not fall solely under one 
program. They will eliminate virtually all inconsistencies that 
have the potential to cause confusion for our employees.
    Several bipartisan commissions, the Congress, the American 
people have asked and expect the FBI to be able to answer a 
question such as, ``Are there sleeper cells in this country 
planning attacks like those our international partners in 
London and Spain have suffered since September 11th?''
    In order to answer these questions, the FBI has to expand 
its intelligence collection beyond that which is collected as 
part of predicated investigations. It must examine threats in a 
proactive fashion and not simply rely on information that is 
volunteered to us.
    We have asked our employees to think proactively about the 
threats and vulnerabilities in their areas of responsibility, 
and our employees are up to the task. But they need consistent, 
clear guidelines that do not vary based on whether they are 
facing a threat from MS-13 or Hezbollah.
    The FBI has the responsibility, indeed the privilege, of 
upholding the Constitution. We know that, if we safeguard our 
civil liberties but leave our country vulnerable to terrorism 
and crime, we have lost. If we protect America from terrorism 
and crime but sacrifice our civil liberties, we have also lost. 
We are always mindful that our mission is not just to safeguard 
American lives but to also safeguard American liberties. We 
must strike the appropriate balance at all times.
    Finally, I am well aware of the public's interest, as well 
as the interest of this Committee, in the anthrax 
investigation. As you know, the Department of Justice and the 
FBI do not typically publicly disclose evidence against a 
suspect who has not been charged, in large part because of the 
presumption of innocence afforded an accused.
    But because of the extraordinary and justified public 
interest and with special concern for the victims of the 2001 
and 2002 anthrax mailings, we, the Department of Justice and 
the United States Postal Service briefed victims, Members of 
Congress and the media to provide information unsealed by the 
district court after the death of the person we believed was 
responsible for the attack. This included information about 
science developed during the investigation, and that was 
central to the ultimate focus of the case on Dr. Bruce Ivins.
    The science employed was developed and validated throughout 
the investigation with the help of more than 60 outside experts 
and researchers. Nevertheless, because of the importance of 
science to this particular case and to perhaps cases in the 
future, we have initiated discussions with the National Academy 
of Sciences to undertake an independent review of the 
scientific approach used during the investigation.
    We have worked diligently to provide as much information as 
we can within legal parameters, including privacy rights and 
also mindful that, for the time being, this case remains open 
while certain investigative activity winds up.
    One last point, Mr. Chairman. Given the headlines of the 
last few days, we will say that although we have--referring, 
quite obviously, to the mortgage crisis that is affecting our 
economy--we will say that, although we have currently over 
1,400 open cases and almost 500 convictions just in the last 2 
years, the Committee should understand that, just like the S&L 
crisis in the early 1990's and the corporate excesses of the 
beginning of this decade, the FBI will pursue these cases as 
far up the corporate chain as necessary to ensure that those 
responsible receive the justice they deserve.
    And, Mr. Chairman, I would like to conclude by thanking you 
and the Committee for your support, your suggestions, and I 
certainly would be happy to answer any questions you might 
have.
    [The prepared statement of Mr. Mueller follows:]
       Prepared Statement of the Honorable Robert S. Mueller, III

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Conyers. Thank you very much.
    The Chair neglected to mention that we are grateful to your 
Chief of Staff Lisa Monaco and FBI General Counsel Valerie 
Caproni, and there are two others with them, and we are 
grateful to them as well.
    Mr. Mueller. Thank you.
    Mr. Conyers. Now, you have given a very thoughtful look at 
the good things that have come out of the Bureau, which is 
totally appropriate, but it is like we didn't make any opening 
statements hardly at all. I mean, look, for months we have been 
trying to get a reasonable response to the seven questions that 
I have put to you in my opening. I asked someone to give them 
to you in writing at the beginning.
    What is this? I mean, we only get 5 minutes up here each. 
You know that. What can we accomplish between two people 
talking every 5 minutes? By then it's the end of the hearing, 
and we go back and start writing you more letters? How come we 
can't get some straight answers on the questions that I sent 
you, I ask you, I give you in person? What is this?
    Mr. Mueller. Mr. Chairman, there are a number of mechanisms 
for my working with the Committee. I have always made myself 
available to sit down and discuss particular issues. When it 
comes to questions for the record, as I am sure you understand, 
we draft responses, it goes through a thorough review by the 
Justice Department, and there is, inevitably, some delay.
    We understood the question that you had put to us, and we 
worked to get the response to the letter back to you by as soon 
as we could yesterday--it does have to go through the review 
process. But we do our level best to either orally or in 
writing get you responses to your questions as soon as we can.
    I also, as I think you understand, and the other Members of 
the Committee to the extent that you would like to, not in this 
format but another format--to sit down and discuss the issues. 
I am available to sit down and discuss what issues may be on 
your mind. Whether it be myself or my general counsel or my 
chief of staff or others in the organization, to the extent 
that briefings are requested and, certainly, from our 
perspective, necessary, we have tried to make persons within 
the Bureau available both to you, as well as to your staff.
    And my own--I am sure you will correct me if I am wrong, 
but I thought we had a--have had a very good relationship with 
this Committee and have been responsive, not, occasionally, 
because of necessity of vetting but--there has been delay--but, 
nonetheless, we have been forthcoming and straightforward with 
our answers.
    Mr. Conyers. Director Mueller, we have a very good 
relationship. But we just don't get anything. You don't give us 
anything. And at a song and dance hearing like this, 5 minutes 
each from 25 Members, what is that going to get us? Where will 
we be if we never had the hearing in the first place?
    I mean, look, these are serious, important questions that 
we keep writing you, meeting with you about, talking with you, 
holding hearings, and you say we have a good relationship. 
Well, maybe it is, but we don't get any information in this 
relationship.
    Mr. Mueller. The only--what I can say----
    Mr. Conyers. Well I gave you----
    Mr. Mueller [continuing]. Seven is----
    Mr. Conyers [continuing]. Seven questions. You didn't 
mention them. I mean are you, like, ``So. This is another set 
of the same questions they keep on asking me?''
    Mr. Mueller. We worked hard to respond to your letter. I do 
believe we got a response to that letter last evening after it 
had been vetted throughout the administration. I met with you, 
as you are aware, and we discussed some of these issues, and I 
would be happy to meet with any of the other Members and 
discuss these issues.
    Mr. Conyers. Why won't you give us what we ask for? That is 
all I want to know. If you are not going to give it, at least I 
can rationalize or tell the Committee why we are not getting 
it. I am not forcing you to give it to me, but if you are not 
going to give it to me, you could give me some direct answers 
so I don't have to do this in the Committee.
    Mr. Mueller. Mr. Chairman, we did respond to your letter. 
It was received. I think it was sent up last night after it had 
been vetted. And that was on very short notice. So I do believe 
we have tried to be responsive. And the questions for the 
record, we try to be responsive to each one of the questions 
for the record we have and receive, and I do believe we have 
been responsive to those questions.
    Mr. Conyers. On July 28 in Cleveland, we had an FBI and, I 
guess, police raid. Two-hundred officers came to Jimmy Demora's 
home to find out who paid for the paving of his driveway. And 
it just so happens he is the chairman of the Cuyahoga County 
Democratic Party, as well as a commissioner on the county 
board, and also involved is Frank Russo, the Cuyahoga County 
auditor. Can you give us some information about this?
    Mr. Mueller. Well, I am not familiar with the particular 
search that apparently was executed on that day or the 
specifics of the investigation, but I would be glad to get back 
to you, to the extent that we can, since it, quite probably, is 
an ongoing investigation--with what information we can, and we 
will do it promptly.
    Mr. Conyers. Thank you.
    Mr. Lamar Smith?
    Mr. Smith. Mr. Chairman, I am going to defer to the 
gentleman from North Carolina, Mr. Coble, who has a conflict in 
about 2 minutes in another hearing, and then I will ask my 
questions later on.
    Mr. Coble. I thank the Ranking Member.
    Thank--transportation hearing is going on now, Mr. 
Chairman. I have got to attend.
    Director, good to have you with us.
    Director, you mentioned the mortgage crisis problem 
regarding the bad actors, and I think, in some instances, the 
bad actors can be the lenders as well as the borrowers.
    Let me put a two-part question to you. Is mortgage fraud 
primarily a Federal offense, A, and, B, what role does state 
prosecutor--the state banking regulators play in identifying 
and shutting down fraudulent lenders?
    Mr. Mueller. Let me, if I could, respond to the first part 
of the question by saying it is both a Federal offense but also 
a state and local offense. And recognizing that, we now have 42 
task forces around the country, which include personnel from 
the Federal authorities, but in many cases personnel from state 
authorities as well, and we will take cases either in the state 
criminal justice system--to the state criminal justice system 
or the Federal system as is warranted.
    We have over 1,400 mortgage-fraud cases that are directed 
principally at brokers, appraisers, buyers, lenders and the 
like. We have another set of cases which are directed at large 
institutions, where we are looking at allegations of 
misstatements of assets. We have 24 of those cases we are 
currently looking at.
    That latter group of cases are ones that most likely, if 
there are charges to come from them, will be Federal charges. 
But in terms of the other class of cases, where you have 
brokers and appraisers and buyers and the like, they can go 
either federally or locally, and we bring them in whichever 
jurisdiction makes some sense given the particular case.
    Mr. Coble. Thank you, sir.
    Director, some critics assert that scarce Federal law 
enforcement resources should not be expended on the 
investigation and prosecution of intellectual property rights 
cases. They contend that private right' holders should look to 
their own resources to protect their intellectual property 
rights and that Federal law enforcement authorities should be 
encouraged to focus on what they call ``higher priority 
matters.'' What do you say to that?
    Mr. Mueller. We do have jurisdiction, along with other 
entities, to investigate and prosecute--or investigate and turn 
over to the prosecutor the investigations of intellectual 
property cases. We have a number of priorities. Intellectual 
property is something that we handle when we can bring 
something special to the table and this--as I indicated in my 
remarks, in this increasingly flattened world, where 
globalization means that crooks can cross borders at will, 
whether it be with the Internet or otherwise, many of the 
intellectual property investigations require a--or have an 
international nexus. And when that occurs, we have over 60 
legal attache officers around the world, and we involve them in 
those large investigations.
    We recently had a case, as an example, we did it with ICE 
and with Customs and Border Patrol and in conjunction with the 
Chinese authorities in which we seized millions and millions of 
dollars of counterfeit goods and a number of persons were 
arrested. That case is indicative of the type of effort we will 
put in when it is a case that lends itself to being handled by 
the Bureau.
    Mr. Coble. Thank you. Thank you, Director.
    Speaking of crossing borders, put on your immigration hat, 
Mr. Director, if you will. What are the risks that the violence 
caused by increasingly brazen drug cartels in Mexico will spill 
over across the border into the U.S., particular as to border 
towns?
    Mr. Mueller. What our great concern is, as the Mexican 
authorities have cut down drugs coming to the United States as 
well as--in conjunction with Department of Homeland Security 
cut down on numbers of persons coming across the borders, there 
has been a battle between the cartels--in that arena.
    Most of the violence occurs south of the border. However, 
there have been a number of instances where there have been 
kidnappings of individuals--American citizens--who have 
traveled either to their business or to visit family in Mexico 
and have been kidnapped. Where that has occurred along the 
border, we have established antikidnapping task forces in 
conjunction with state and local law enforcement and also with 
vetted counterparts across the border in Mexico.
    We have had a few instances where the violence has spilled 
across the border in the sense that there have been shootings 
on this side involving persons who were participants or 
associated with a group south of the border, but they, 
thankfully, have been relatively few.
    We are looking and monitoring the situation to assure that 
violence that is occurring south of the border does not spill 
in to the United States, and if it does, we, along with the 
other Federal authorities and state and local authorities, will 
take swift action.
    Mr. Coble. I see my time has expired.
    Thank you, Mr. Director.
    I yield back, Mr. Chairman.
    Mr. Conyers. Thank you, Mr. Coble.
    Chairman Jerry Nadler?
    Mr. Nadler. Thank you, Mr. Chairman.
    Mr. Director, first, before I give my questions, let me 
congratulate you on what was--on your role in standing up 
heroically against abuse of power as revealed in the last 
couple of days in The Washington Post with respect to a few 
years ago. And I mean that sincerely.
    Now, I want to talk some--ask a couple questions about the 
anthrax investigation.
    Now, the FBI has said that--essentially that this fellow, 
Ivins, apparently was the culprit. And he is, of course, 
deceased. Now, in understanding the bottom line of the Bureau's 
investigation and how accurate we can take it to be, it is 
important to understand the actual nature of the murder weapon, 
that is, the anthrax that was sent through the mails.
    The scientists at the U.S. Armed Forces Institute of 
Pathology who examined the powder contained in the letter to 
Senator Daschle's office said it contained silica. Now, some 
observers say the silica may have been a sophisticated additive 
designed to make the powder a more deadly killer. Now, this 
additive requires special expertise to apply to anthrax spores, 
an expertise that, according to his former boss at USAMRIID, 
the chief suspect, Mr. Ivins, simply did not have.
    Now, the briefing last month convened by the Justice 
Department to lay out details of its case, government 
scientists said the powders in the attacks contained no 
additives, only some silicon, which they described as naturally 
occurring.
    Now, scientists say that a percentage of silicon higher 
than half of 1 percent has never been recorded in the 
scientific literature as naturally occurring. So if that 
percentage is higher than half of 1 percent, it would be 
indicated that it was not natural, that it was added by a 
sophisticated operator.
    So for the record I want to ask you, what was the 
percentage of weight of the silicon in the powders that your 
experts examined?
    Mr. Mueller. I would have to get back to you on that.
    Mr. Nadler. I assumed you were going to say that.
    Mr. Mueller. But I will tell you that issue came up early 
in the investigation. It was vetted not just by our scientists 
but scientists around the country who specialize in this. And 
the last point I would make is that we--as I have indicated, we 
are in discussions with the National Academy of Sciences to do 
an independent review, in which that issue, quite obviously, 
would be one of those issues addressed.
    Mr. Nadler. But you can tell us what that percentage was?
    Mr. Mueller. I believe I can, yes.
    Mr. Nadler. Thank you.
    Now, if the percentage is greater than half of 1 percent--
or certainly greater than 1 percent--then that would be a 
strong indicator that the anthrax was manipulated deliberately 
to be a very sophisticated killer. There are only a handful of 
facilities in the United States which have been publicly 
identified as having the experienced personnel and equipment 
necessary to make anything approaching such an anthrax powder, 
including the U.S. Army's Dugway Proving Grounds and the 
Battelle Memorial Institute in Jefferson, Ohio, a CIA 
contractor.
    Were those facilities ever targets in the investigation?
    Mr. Mueller. Using ``target'' is somewhat a weighted word 
in terms of----
    Mr. Nadler. Well, were they ever looked at?
    Mr. Mueller [continuing]. In terms of what we looked at in 
the course of the investigation, you can assume that we looked 
at every laboratory in the United States and several overseas 
that had both the type of the Ames anthrax that we found in 
this case but also had individuals capable of undertaking the 
drying and preparing of the anthrax that was sent in the 
letters.
    Mr. Nadler. Well, if--and the addition of the silica if 
that proves to be the case.
    Now, if these facilities were looked at, could you tell us 
how and why they were ruled out since, obviously, you zeroed in 
on Fort Dietrich and on Mr. Ivins?
    Mr. Mueller. I would have to get back to you on individual 
facilities. I would think, as you are well aware, that, over a 
period of time, we developed the genetic morphology of the 
anthrax used in the letters and--which was relatively unique, 
having four separate distinct genetic markers, and that led to 
identifying the vial that was labeled RMR1029 and was found in 
Dr. Ivins's laboratory. And so there was a clear identification 
of the anthrax in the letters back to being--referred--or 
related back to the anthrax that was in the vial in Dr. Ivins's 
laboratory.
    And that, in and of itself would give you one means of 
eliminating others, although to the extent that there was 
anthrax that had been distributed from that vial, we traced all 
of that anthrax and eliminated any other persons who may have 
had access or utilized that access as a suspect which is----
    Mr. Nadler. Final question. Do you agree, as many have 
suggested, that there may be a need for an independent review 
of the evidence, especially given that bioforensics is such a 
new field, and would the Bureau cooperate with such an effort, 
and what possible downside could there be from such a review if 
it were to take place?
    Mr. Mueller. Well, as I have indicated that--we are in 
discussions with and are going to request of the National 
Academy of Sciences review the work that was done in the course 
of this investigation and it is an independent review by a 
panel of scientists that will be pulled together by the 
National Academy. Many of the scientists the National Academy 
ordinarily would seek to have on a panel are scientists that 
were already used in the course of the investigation. But as I 
say, the National Academy is an independent entity and will be 
conducting a review.
    Mr. Nadler. Well, thank you, and I just want to say I hope 
you will get back to us relatively quickly with the weight of 
the percentage of the silica and why these other facilities 
were ruled out.
    Mr. Mueller. Will do so, sir.
    Mr. Nadler. Thank you.
    I yield back.
    Mr. Conyers. Thank you, Chairman Nadler.
    Ranking Member Lamar Smith?
    Mr. Smith. Thank you, Mr. Chairman.
    Director Mueller, I would like to go back to three subjects 
that you touched upon in your opening statement just to get you 
to elaborate a little bit more upon them.
    The first is what, again, are some of the disadvantages, 
defects of the current system when it comes to trying to 
prevent terrorist attacks?
    Mr. Mueller. Well, with particularly the Attorney General 
Guidelines, which is one of the subjects, I know, we wish to 
address today, there is several reasons why they need to be 
changed.
    The first is, as many entities that have looked at what 
happened on September 11--whether it be the Joint Congressional 
Committees, the 9-11 Commission, the WMD Commission--have 
looked at the Bureau, they have come to say that the Bureau 
needs to be more proactive, you have to prevent another 
September 11. It is not sufficient that you do the job of 
investigating after the attack and brining the persons 
responsible to justice.
    And we have to build up our intelligence. And in doing so, 
we have to understand that we need all of the tools--the ones 
that we use on the criminal side--to be applicable on the 
national security side. If we can do surveillances, pretext 
interviews and the like on the criminal side, when we have a 
threat, we should be able to do the same thing on the national 
security side. So the purpose of the guidelines is to eliminate 
that wall, allow us to utilize those techniques to prevent 
terrorist attacks, as well as to investigate them after the 
fact.
    Mr. Smith. Next question is this: I think you have made a 
persuasive argument on the need to change the rules or 
guidelines. Can you give us, though, some visual, graphic, 
real-life examples of the kinds of terrorist crimes that could 
be prevented if you--when you implement these new rules and 
guidelines that could not be prevented under the current rules 
and guidelines?
    Mr. Mueller. Let me use, perhaps, two examples. One is the 
Phoenix memorandum. Most people are familiar with the fact that 
a very good agent in Phoenix prior to September 11 noted that 
individuals from the Middle East who were associated with more 
radical elements in the Phoenix area were taking flight 
lessons. He drafted a memorandum, it was sent back to 
headquarters, and no action was taken on it by the time of the 
attacks.
    It is that kind of threat and identification of a very 
suspicious circumstance that would warrant further 
investigation. And under the preceding guideline, it would be 
problematic in order to undertake the activities we wanted to 
follow up on.
    Another example would be we know, quite obviously, that in 
western Pakistan now--that there are camps in which individuals 
are being trained. The U.K. knows that very well because 
individuals who were involved in the 2005 attacks and later 
attacks had traveled to Pakistan for training in the camps and 
then come back.
    I believe the American public, this Committee would want us 
to understand that potential threat and do what is necessary to 
try to identify persons who had traveled to Pakistan--whatever 
their heritage, whatever their background, whatever their 
ethnicity--to determine who is going to Pakistan to obtain that 
training and may be coming back to the United States to 
undertake an attack. Under the previous guidelines, undertaking 
that type of investigation would be problematic because we had 
not focused on one particular crime and one individual.
    Mr. Smith. Okay. Thank you, Director Mueller.
    One last question, and you did mention this in your opening 
statement. It is true, I believe, that some of these rules and 
guidelines--most of them--can now be used to try to solve the 
usual types of crimes that we would consider sort of everyday 
crimes but under current rules cannot be used to try to prevent 
terrorist attacks. I don't know what the genesis of that 
distinction was, but clearly, in this day and age, as a--and 
the subsequent era of 9-11, we need the same tools and 
guidelines that have been used to solve robberies to enable us 
to prevent terrorist attacks.
    I don't know if you want to comment on that any more than 
you already had, but it clearly seems to me that, if you are 
going to use them for one type of crime, you ought to be able 
to use them for other types--to prevent other types of crime as 
well.
    Mr. Mueller. Well, perhaps I could use an example. If we 
received word that there was drug dealing out of a particular 
bar in a area of the city, under the criminal guidelines we 
would be able to put up a surveillance on that bar to determine 
whether or not a person was--whether there was drug traffic 
coming in or not, we could send an agent doing pretext 
interviews to gain information. We could recruit and task 
sources to go in to determine whether there was drug 
trafficking in that bar.
    However, if the allegation was that Al Qaida was recruiting 
suicide bombers in that bar or Hezbollah was seeking to 
generate funds in that bar, we would be precluded by the 
national security guidelines from conducting a surveillance, 
recruiting and tasking sources or doing a pretext interview. We 
would be limited to going in there and saying, ``Okay. I am the 
FBI. Is there any illegal activity happening here?''
    And that is the contradiction between the two sets of 
guidelines.
    Mr. Nadler. That is a good example, and it is a good one to 
end on as well.
    Thank you, Director.
    Thank you, Mr. Chairman.
    Mr. Conyers. Thank you, Lamar Smith.
    Chairman Bobby Scott?
    Mr. Scott. Thank you.
    And thank you, Mr. Director.
    There is concern about the upcoming election--that if be 
fair. It looks like--every indication--there will be several 
states that will be extremely close so we want to make sure 
there is no problem. If someone were running a voter scheme to 
violate your right to vote, would that be something the FBI 
would have an jurisdiction over or an interest in?
    Mr. Mueller. We would. I will tell you that we have a 
person steeped in election law in every one of our field 
offices who will be alert at the time and before the election. 
I won't go so far as to say we have got a task force, but we 
have people standing by in the course of each election to 
respond to complaints along those lines.
    Mr. Scott. And--and----
    Mr. Mueller. And we do it in conjunction with the 
Department of Justice.
    Mr. Scott. And if voter registrars, for example, were 
giving out information that was inaccurate, would that be 
something--and discouraging people from registering to vote--
would that be something the FBI would have an interest in?
    Mr. Mueller. I would have to look specifically at the 
statutes, but my assumption would be that, with the Department 
of Justice, it is something we would examine.
    Mr. Scott. Thank you.
    Mr. Mueller. Depending on the intent and, quite obviously, 
the facts of the situation.
    Mr. Scott. You are familiar with the report that was on 
``60 Minutes'' over the weekend about ballistics tests?
    Mr. Mueller. Yes.
    Mr. Scott. What--and apparently, at the time the report was 
given, there were people in jail based on evidence that has 
subsequently been found not to be reliable?
    Mr. Mueller. What I believe you are talking about is ``60 
Minutes'' had a story about what we call ``bullet lead 
analysis,'' which was an analysis we did for a number of years 
several years ago. We went to--I believe it was the National 
Academy of Sciences--and said, ``We believe the science is 
appropriate. Would you review it.'' They reviewed it, said the 
science is appropriate but it lends itself to experts at trial 
exaggerating the import of the science.
    We decided to discontinue that. At the time, we sent 
letters out to prosecutors that had had cases in which that 
bullet lead analysis expertise was utilized. We sent it out to 
National Association of Defense Attorneys. We identified and 
sent letters to the departments that had utilized it, as well 
as the prosecutors.
    We came to find that in several circumstances, a number of 
circumstances, that was insufficient. And since then we have 
gone back and are pulling all of the transcripts of the trials 
in which our expertise was used to determine what impact the 
expert had and to determine whether or not the expert stayed 
within the confines of his expertise.
    And we are doing this with the Innocence Project, I might 
add, who did a very good job of looking at this issue, bringing 
it to our attention and then is working with us to make certain 
that we evaluate the import of this testimony in each case in 
which it was used.
    Mr. Scott. Thank you. And on mortgage fraud, is your 
investigation on fraud in the mortgage industry aimed at 
individual cases or an organized, systematic situation where 
the entire industry was involved in defrauding people out of 
their money?
    Mr. Mueller. We are looking at all--I guess I would say all 
levels of the issue. On the one hand, as I indicated before, we 
are looking at brokers and appraisers and buyers and lenders at 
the local level, but we also have 24 investigations that are 
looking at corporations--large corporations, where the 
allegations would be that there were misstatement of assets. So 
we are looking at it from the large corporation perspective, as 
well as various schemes that were undertaken at the local 
level.
    As I said, we have had in the last 2 years, I think, more 
than 500 indictments--I am not sure of the actual number of 
convictions but--and we currently have 1,400 cases of the 
state--the local variety and 24 cases of the corporate variety.
    Mr. Scott. What is the jurisdiction of the FBI over the 
Federal Prison Industries?
    Mr. Mueller. I don't think it is a question of 
jurisdiction. I do believe that is a question of purchase of 
furniture from prison industries that has been an issue. And as 
to that, I know it was raised before, we went back to our legal 
counsel and to the purchasing department to make certain that 
we are maximizing our ability under the law to look at the 
purchase of furniture from the prison industries. And we have 
followed the law with regard to those purchases.
    Mr. Scott. Is the Federal Prison Industries an important 
agency as far as the FBI is concerned?
    Mr. Mueller. My understanding is it is part of the Bureau 
of Prisons, quite obviously, and we are close to our sister 
agency, but we have to follow the law when it comes to 
purchases, understanding that the desirability of assisting the 
Bureau of Prisons and providing work for its inmates and 
producing furniture that then can be sold. We have to--whatever 
purchases we make have to be done according to the applicable 
purchasing regulations.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Conyers. Darrell Issa, California, serves with 
distinction on both the Intelligence Committee and the House 
Judiciary Committee.
    Mr. Issa. Thank you, Mr. Chairman.
    And, Mr. Chairman, before I begin, I would like to suggest 
that we look at Mr. Scott's reference to prison industries and 
on a bipartisan basis look at the history of unsuccessful 
reform to make that an industry in which government would want 
to buy the output, and I would offer--I am a former appointee 
to the California Prison Industries board. I would be more than 
willing to work on the reform that could lead to improvement in 
the skills training and the output, and hopefully that would 
help solve a problem that I know vexes all of us here on the 
podium.
    Mr. Scott. If the gentleman would yield?
    Mr. Issa. Of course.
    Mr. Scott. We have had bipartisan cooperation on that and, 
unfortunately, bipartisan opposition. So I would be more than 
willing to work with you on that.
    Mr. Issa. I thank you, Chairman.
    Mr. Chairman, thank you for yielding time.
    Director Mueller, this is never an easy place for you to 
come so I will start off by saying congratulations on being at 
the helm on the 100th anniversary of the creation. You know, 
the fact is the FBI has gone from 30 or so--30,000 over the 
last 100 years and has proven to be the one go-to for all 
levels of investigation.
    And I would like to touch on a couple of things because I 
am concerned today that, because we give you everything to 
investigate, that perhaps how you prioritize has been a 
problem.
    First of all, in dealing on a global basis with the global 
war on terror and the resources you have had to be put in 
foreign embassies and so on, have you been given the resources 
necessary to do that while continuing to increase your 
vigilance in the other areas of Federal crime?
    Mr. Mueller. Well, we had to--in the wake of September 11, 
we moved almost 2,000 agents from the criminal side of the 
house to national security, and national security being 
counterterrorism, as well as counterintelligence give the 
threats from various countries wishing to steal our secrets. 
And the third aspect of national security is cyber security. So 
those three national security priorities received almost 2,000 
agents.
    The directive to every one of our special agents in charge 
is you have to know what is happening in your domain, in your 
jurisdiction when it comes to counterterrorism. That is number 
one. Counterintelligence is number two, and cyber is number 
three. Then you hit the criminal priorities.
    And we have had to, on the criminal side, prioritize. We 
took, I would say, better than half of those agents from the 
drug program. We have very significantly ratcheted back our 
participation in the war on drugs, limiting it to participation 
in the OCDETF program.
    Mr. Issa. Okay. Director Mueller, because my time is 
limited, I would like to follow up because I think you have 
made my point very well.
    The war on terror, China and other countries' relentless 
attack on cyber world--both DOD but also even the U.S. House of 
Representatives has been invaded, and Trojans have been put 
inside our computers by China, other countries as well. You 
have never been given significant new resources for that. You 
have never been given significant resources for all the other 
counterterrorism you are doing.
    Can you tell this Committee today--or can you respond in 
writing--recognizing that you transcend administrations, what 
it is going to take give 100 percent appropriate effort in 
those new tasks, including this exponentially growing attack on 
the Internet while getting you back to historic levels of such 
things as the gentleman from Virginia mentioned?
    Look, we have got House and Senate members who are 
implicated in receiving discount loans from Countrywide. We 
have tens of thousands of people who in some way, shape or form 
were part of the problem of subprime, and you have made it 
clear, you are resources are limited and some of your 
investigation capability of September 11 left those areas.
    So because the time is limited, and because I know that the 
majority will ask a lot of other questions, I would really 
appreciate it if you would give me a short response and then go 
on beyond this so this Committee could begin to look--because 
my guess is that you are 30,000 men and women and your budget 
should have been increased by a good 10,000 if you were to deal 
with cyber security and with the threat of Al Qaida and other 
groups, and please respond.
    Mr. Mueller. We continuously put in requests for resources. 
It goes through the Department of Justice, OMB, the 
administration, quite obviously, as you are all too well 
familiar----
    Mr. Issa. But they have never asked for those kinds of 
numbers, and this is your chance.
    Mr. Mueller. I would be happy to. We have a 5-year plan in 
which we have laid out the growth of the Bureau. I would be 
happy to come and try to make that available to you with the 
assistance of Department of Justice.
    And it is a question of prioritization, and we have done 
everything we can to make certain that we have our 
prioritization right. As I say, we are not doing what we did on 
the war on drugs, and we are not doing as many smaller white-
collar criminal cases apart from the mortgage-fraud case that 
we have done before. And it is continuously an effort to 
request new resources while prioritizing the resources that we 
have. But I would be happy to provide you some information with 
regard to the future of the Bureau and what we expect and hope.
    Mr. Issa. Thank you, Director, and, hopefully, it will be 
your information and your aspirations.
    Mr. Mueller [continuing]. My aspirations.
    Mr. Issa. Thank you.
    Mr. Conyers. Thanks, Darrell Issa.
    Chairwoman Zoe Lofgren Immigration Committee, California?
    Ms. Lofgren. Thank you, Mr. Chairman.
    And, Director Mueller, it is good to see you again.
    I want to get back to a topic that I have raised, I think, 
every time you have appeared before the Committee, and that has 
to do with the FBI name checks for immigration purposes. 
Specifically, I know there have been changes made in the 
processing of legal permanent resident requests that USCIS made 
to expedite, but certainly they have not, nor would I suggest, 
that they make any changes when it relates to citizenship 
applications.
    So the question is where are we? A year ago--actually, a 
little over a year ago, you indicated that we were on the verge 
of taking a great leap forward on the FBI name checks, and then 
again in April of this year, you indicated that we would have--
the leap had not yet occurred but that we were going to get all 
of the FBI name checks down to a 30-day period.
    However, this June the inspector general indicated that the 
name check program is using outdated technology and that the 
staff is poorly trained, that the supervisors are overworked 
and that they are falling behind. So I want to know where are 
we? Are we 90 days current? Are we 30 days current?
    Mr. Mueller. I am ready for you, Congresswoman. I knew--I 
anticipated----
    Ms. Lofgren. I knew that you knew I would ask this.
    Mr. Mueller. Since we first discussed this, we have done a 
number of things to address it. We have raised the fees, 
revised criteria, prioritized the workload, we are building a 
central records complex and we hired over 200 contractors to 
address this.
    As a result, in July of this year, we eliminated the 
backlog where we had cases pending longer than 2 years. By 
November this year, we will have eliminated the backlog of any 
case that is pending longer than 1 year. And by June of 2009, 
we hope to have 98 percent done within 30 days.
    Ms. Lofgren. Well, if I may, right now, you know, in the--
1990's are done within a few minutes because of the 
mechanization.
    Mr. Mueller. Yes. Yes.
    Ms. Lofgren. It is the problem when that doesn't work where 
we have these big delays. So when are we going to get to the 
30-day goal that USCIS----
    Mr. Mueller. I do not believe that you will get--in certain 
cases you will not get to the 30-day goal, which is why it is 
98 percent. You will have persons that come up--and multiple 
files. We have, I think, it is something like 100, 172 million. 
What is it--172--yes. We have got miles and miles and miles of 
files. We cannot digitize all the files. We will always have 
files from many years ago, although we are not going back now 
as often as we did, where we have to go to paper files. And 
those paper files can be located anyplace around the country.
    And, consequently, we will never, I don't believe, be able 
to have 100 percent done within 30 days, but it will very, very 
few, and it will be down to--as we said, 98 percent will be 
done within 30 days.
    Ms. Lofgren. Let----
    Mr. Mueller. And as I said--the other thing I think is 
important to note is that, as of November of this year, we will 
have totally limited the backlog of those that were pending 
longer than 1 year. So it may be 30 days, it may be 45 days, it 
may be 60 days, but it will be nowheres like it was 2 or 3 
years ago.
    Ms. Lofgren. Do you have information of the name checks 
that were in this process what percentage of individuals were 
found problematic and illegible as a consequence of the search?
    Mr. Mueller. I think I heard at one point it was very low, 
but I would have to get back to you with that statistic.
    Ms. Lofgren. Could you get that information if you have it?
    Mr. Mueller. Yes, I could. Yes. Yes.
    Ms. Lofgren. I mean, if you don't have it, I wouldn't want 
you to put a huge amount of personnel into finding it, but I 
would like--I am interested in knowing that.
    Mr. Mueller. I will make one point if I could is, even if 
it is low--and I expect it to be fairly low--you don't know 
where that one person----
    Ms. Lofgren. No.
    Mr. Mueller [continuing]. Where that person----
    Ms. Lofgren. As you have--I have not suggested that this 
be--as I opened, that this be abbreviated in any way, but I am 
interested in----
    Mr. Mueller. Yes, ma'am.
    Ms. Lofgren [continuing]. In the statistics.
    I will just express a concern and I know that you did 
address your interest in technology in your testimony and 
talking about deployable biometric tools. But those goals, 
which I think are useful ones and important ones, seem to be at 
odds with the intensive by-hand search of paper files that you 
have just described for the name check. Can you rectify your 
statement about the new technology and where we are in this 
name check?
    Mr. Mueller. Well, it is time, personnel and money to 
digitize every file the Bureau has and----
    Ms. Lofgren. Well, certainly, some files are closed. Some 
files everybody is dead. I mean you don't want to do that.
    Mr. Mueller. What we have done is, where we are looking at 
a file, we will digitize that file. In other words, if it comes 
up--if there is something comes up in the course of a 
background check, we will digitize that file and--at least I--
in most cases I think we do--when the possibility will be that 
that files need to be retrieved again.
    We are utilizing technology to both digitize and have files 
remotely reviewed. We are using technology we can in this--
addressing this particular problem, but the idea would be to 
digitize everything. But OCR'ing a handwritten record would 
take forever, and it wouldn't----
    Ms. Lofgren. You could----
    Mr. Mueller [continuing]. Do what you----
    Ms. Lofgren [continuing]. You could make it searchable.
    Mr. Mueller. It might well, but you have to code it or you 
have to OCR it in order to make it retrievable in a digital 
file. So there is some pushes and takes in terms of what you 
can do in terms of digitizing all our files. Ideally, the model 
is digitize everything and make it immediately searchable, but 
it is an ideal that really you can't obtain and so you have to 
have a number of strategies to maximize your ability to 
retrieve those records quickly.
    Ms. Lofgren. I know my time has expired, Mr. Chairman.
    But I am very interested--and I don't know whether you want 
to do it here in a public forum or at a more discreet forum, 
but we have, as we digitize information, I do have a concern 
about what security we have in place to keep that database 
secure from intruders. And I don't want to talk about the FBI, 
but the Federal Government as an entity does not have a great 
track record of maintaining security of its databases so I am 
very, very interested in what you have deployed in that area, 
and whether you want to address that now or at a later day, I--
--
    Mr. Mueller. We are very concerned about that, quite 
obviously, and what I would have to do, I think, is get back to 
you, if I could, with some information on the particular 
processes, audit trails and the like that----
    Ms. Lofgren. I would very much appreciate that.
    Thank you, Mr. Chairman.
    Mr. Conyers. Dan Lundgren is a former Member of Congress 
who did a stint as attorney general of California and is now 
back with the Committee.
    Mr. Lungren. Thank you very much, Mr. Chairman.
    Thank you, Director Mueller, for being here.
    Let me go back to something that we have gone over in your 
previous appearances here, and that is the experience we had 
with national security letters and exigent letters. And we saw 
the report from the inspector general on that and your response 
of the changes that you had made to ensure that we didn't have 
those problems.
    But I would like to ask once again, was there any 
disciplinary action taken with respect to anybody on that? 
Because, as I recall, the conclusion of the inspector general 
was not that there was any intentional wrongdoing or criminal 
activity but that it was essentially--I will use a word that he 
didn't use but it sounded like sloppiness and lack of training 
of the agents of the seriousness of it, lack of enforcement by 
the SAC's and so forth.
    And while I appreciate you have made changes--and I think 
you have made changes--to ensure that doesn't happen again, was 
anybody ever found at fault, or was it just one of these things 
where we say, ``Well, gee, no one did a good enough job, and 
that is too bad''?
    Mr. Mueller. We, as I believe you are aware, the 
investigation is ongoing in exigent letters, which is one of 
the areas that was harshly described by the IG, and that is an 
ongoing investigation. My expectation is, as this happened in 
other similar instances, that the IG will reach some findings 
with regard to individuals, and I will look at those findings 
and determine whether or not action should be taken.
    With regard to the over-arching problem that you----
    Mr. Lungren. Right.
    Mr. Mueller [continuing]. You, I think, paint a picture of 
what happened, and it is very difficult that, other than me, 
who did not to put into place the appropriate procedures--not 
procedures because procedures were in place but the compliance 
to ensure that it was done to point one person who was 
responsible for what was a widespread departure from the 
procedures that have been put in place.
    Mr. Lungren. And what about the question we have talked 
about before, which was the legal advisor to the SAC is someone 
who is in the chain of command underneath the SAC and, 
therefore, very much--their advancements or their evaluations 
are very much in the bailiwick of the person to whom they are 
to give legal advice. And one of the questions that arose 
during this whole process was why didn't any of the legal 
advisors to the SAC's every raise this problem. And the 
question was whether or not there ought to be a greater chain 
of command from your general counsel to those legal advisors? 
What have you done with respect to that?
    Mr. Mueller. A couple things. We had a substantial training 
program and--with CDC's in terms of their responsibilities, 
particularly when it goes to this particular program, and we 
have in process a change of changes with regard to the 
selection and the performance evaluations with regard to CDC's 
in which the general counsel will play a much more substantial 
role. That has not been finalized at this point.
    Mr. Lungren. Let me raise what may be a touchy question 
from both your side and our side.
    One of the things that is raised with me when I go to other 
Members and talk to them about the responsibilities of your 
bureau and the necessary authority for your bureau and even 
adopting these new guidelines from the Department of Justice is 
a concern that was raised amidst the investigations of some 
Members of Congress.
    And why it is touchy is because I don't want to say 
anything that would suggest you shouldn't be doing that, but at 
the same time, there have been leaks that have come out of the 
Department of Justice. I recall, when Speaker Hastert raised 
the institutional constitutional question about the manner in 
which a subpoena was carried out here on the capital grounds, 
that, when Speaker Hastert raised that with respect to a 
subpoena served on a Member of the other party but nonetheless 
a Member of the House of Representatives, a leak appeared out 
of the Department of Justice, which appeared to call in to 
question Speaker Hastert and whether or not he was under 
investigation. You may recall there were three different 
statements that were released to finally putting that to bed. 
And at least some Members said to me it appeared that that came 
from the FBI.
    There have been some other investigations of Members where 
leaks have taken place, and when I try and assure other Members 
that, look, there ought to be investigations of Members of 
Congress where there appears to be wrongdoing, not all of those 
most likely are going to end up in finding criminal activity. 
At least in my experience as attorney general of California 
investigating public officials is many of them never did arise 
to criminal liability.
    But what would you have me say to Members who say, ``You 
are asking us to extend the authority of the FBI. You are 
asking us to give them greater power with respect to national 
security letters. You are asking us to pass on these new 
guidelines, and yet we see in our own experience that there 
appear to be leaks from time to time and nothing ever appears 
to happen. You and I have had this discussion. You said, if you 
could find them, you would punish them.
    But the problem is Members sit there and say, if they can't 
control that, how can you convince us we ought to give them 
additional authority or even continue the authority that they 
have? That is the dilemma I have when I am talking to other 
Members. And, again, it is touchy because it is a proper role 
for you to play. I don't want anybody to believe that I am 
saying, you know, ``Back off of investigations,'' but a leak 
can destroy a Member, but, more importantly, it can undermine 
the independence of the legislative branch versus the executive 
branch, and I know you understand that.
    What do you say to a Member--or what should I say to a 
Member--with respect to that kind of a problem, where it 
appears that leaks occur and nothing every happens?
    Mr. Mueller. I would start by saying I abhor leaks. 
Everybody in the organization knows that. They have for some 
time. We will investigate and do investigate leaks and as 
aggressively as we investigate anything else.
    I would say too often that we are the entity that people 
turn to as the leaking institution when in very many of these 
cases it is not the FBI at all, it is others who have access to 
the investigation, whether it be the Department of Justice or 
defense counsel or other players.
    And the last point I would make is I would like nothing 
more than to successfully prosecute, whether it be somebody in 
the FBI or elsewhere, but all too often the one entity that has 
the evidence as to the leaks is unattainable, quite obviously, 
and that would be the reporters. And so you have one party that 
you are looking at, but you do not have access to the 
information on the other side that would enable you to actually 
bring the case before a jury.
    All I can tell you is that it hurts the reputation of the 
FBI, it undercuts our prosecutions and our investigations, and 
I do whatever I can--I do, I think, what I can to assure that 
there is no leak from the FBI in these very sensitive 
investigations. I mean, we have any number of sensitive 
investigations that are maintained confidential all the way up 
in time until indictment, and, as I said, the abhor the leaks 
and other investigations that are disclosed prior to the 
appropriate time.
    Mr. Lungren. Thank you.
    Mr. Conyers. Thank you.
    The Chair recognizes the a civil-rights and voter-rights 
champion on Judiciary Committee, Maxine Waters.
    Ms. Waters. Thank you very much, Mr. Chairman. I am sorry I 
could not be here for the entire hearing. I have been running 
between several Committees here, but I am very pleased that you 
are holding this hearing.
    And I would like to welcome our FBI Director, Mr. Mueller, 
today.
    I wish I had time to talk more about mortgage fraud, but I 
would like to just say, from the information that I have, I am 
very pleased to see that the FBI has been doing a rather good 
job in dealing with this issue, and I hope to be able to talk 
with Mr. Mueller at some time in the near future.
    I have to bring up another very, very urgent issue at this 
time that deals with what is happening, not only in my district 
in one of the small cities there, the city of Inglewood--and I 
don't know if he has been briefed on this--but what appears to 
be happening in too many places around the country.
    You may be aware of the problem in the city of Inglewood, 
California, where in the last 4 months four residents have been 
shot and killed by Inglewood police officers under what can be 
described as questionable circumstances. I asked the Department 
of Justice to investigate these incidents to determine whether 
there is a pattern or practice of discrimination or other 
police misconduct that could result in the violation of civil 
rights or other Federal criminal statutes.
    I have not received an answer yet about my specific 
request, but I would like to know from you whether there are 
other investigations looking in to these kinds of problems? 
Have you been made aware of the problems in the city? I know 
you probably hear a lot about complaints about police 
misconduct all over the country, but Inglewood emerges pretty 
much on the radar screen of many of the people who watch these 
issues all over the country because each month for the past 4 
months an African-American male has been killed by this police 
department.
    Mr. Mueller. I am not familiar with the specifics of 
Inglewood. I will tell you that, when we receive allegations or 
patterns of what appear to be--suspicious patterns which may 
raise to the level of a violation of the civil-rights laws, we 
do investigate along with the Department of Justice. I would 
have to get back to you on that particular set of allegations.
    Ms. Waters. Do you know of any investigations that may be 
going on on this time in any cities in the country around 
police misconduct?
    Mr. Mueller. Oh, I am sure we----
    Ms. Waters. The pattern----
    Mr. Mueller. I am sure we have numerous investigations. I 
can get you the numbers. I don't know it off the top of my 
head. But at any point in time we have a number of 
investigations into police brutality in a variety of forms.
    Ms. Waters. All right. Well, I appreciate that, and your 
offer to get back to us with information about Inglewood would 
be very helpful.
    And since I have just a few more minutes left here on the 
time that I have to raise questions, let me just ask you a 
little bit about the mortgage-fraud work that you have been 
doing.
    As you know, aside from just the regular operation of the 
new products that were put on the market, like the ARM's--the 
adjustable rate mortgages--and the resets and all that caused 
part of the subprime meltdown, we have a lot of allegations of 
people who actually did not know what they were signing or 
somebody else signed for them, they were misled about the 
ability to refinance and other things that look as if there was 
mortgage fraud.
    Have you discovered any specific operation or operations 
that you could safely say were involved with mortgage fraud?
    Mr. Mueller. Yes. We have had a number of prosecutions over 
the last 2 years, I think, in excess of 500 of a variety of 
mortgage-fraud schemes that preyed on unwitting consumers and 
others. So, yes, around the country, particularly in those 
pockets where the subprime mortgage crisis is affecting the 
community is where many of these investigations reside.
    We also, as I indicated earlier, have a number of 
investigations going against financial institutions who may 
well have misrepresented their assets in the course of filings 
and otherwise. And so we are looking at it from both the top, 
as well as those schemes, at what would be the bottom of the 
pyramid.
    And we are doing it in 42 task forces around the country, 
and on those 42 task forces will be agents and specialists and 
experts from a variety of Federal agencies, as well as from 
state and local law enforcement, and then we will choose the 
particular jurisdiction in which to file the case depending on 
the circumstances of the case.
    Ms. Waters. Well, just to alert you probably read the 
newspapers about it already--the foreclosure problem that we 
have is not simply a problem where people are losing their 
homes. It is not simply a problem where the value of homes and 
communities is being driven down. Because those homes that are 
not foreclosed are losing value because they are next door to 
or on the same block as houses that are not being kept up, and 
we tried to do something about this in the housing legislation 
that we passed.
    But the latest scheme is that we hear that people are going 
to be challenged at the polling place, whose addresses match up 
with the homes that have been foreclosed. For example, we are 
told, and information is being revealed, that there will be 
lists of foreclosed homes and people will be asked at the 
polling place who represent that this is their voting address, 
this is their home, and it is very, very serious. And I never 
dreamed that foreclosure would bring us even this additional 
problem.
    But whether we are talking about people whose homes have 
been foreclosed on or people maybe who have lost their homes 
through storms and hurricanes and damage--all of that--this 
business of challenging people at the poll about whether or not 
they are a resident of the state because they are address 
appears to be a foreclosed property is something that we all 
are going to have to deal with. Have you heard about this?
    Mr. Mueller. I had not heard about it, but I can understand 
it. But I am not a--I must confess, I am not that familiar with 
the election laws as they apply to circumstances such as this 
and particularly different----
    Ms. Waters. Who enforces the Voting Rights Act?
    Mr. Mueller. We would do the investigation. The Justice 
Department would be doing the prosecution.
    Ms. Waters. Okay. So I am bringing it to your attention in 
this hearing today that there are allegations and newspaper 
reports of foreclosure lists being used as a way to challenge 
voters at the polls. I am adding to that people who are the 
victims of storms and hurricanes and natural disasters because 
they would fall in the same category. And I am asking you to 
get in front of it and ask the appropriate entities in the 
Department of Justice to take a look a this, and let's not have 
this fight on election day at the polling places.
    Mr. Conyers. Would the gentlelady yield?
    Ms. Waters. Yes. I will yield to the Chairman.
    Mr. Conyers. Who is in charge of this in the Department of 
Justice, sir?
    Mr. Mueller. I would have to look. I am not--hold on just a 
sec. It is the Civil Rights Division.
    Mr. Conyers. Uh-huh. And that is----
    Mr. Mueller. I will follow up on it.
    Mr. Conyers. Okay. Do you know who is in charge of the 
Civil Rights Division?
    Mr. Mueller. I must confess, off the top of my head, I do 
not at this juncture.
    It is acting A.A.G. Grace Chung Becker.
    Mr. Conyers. Ms. Becker is coming over----
    Ms. Waters. She is coming over?
    Mr. Conyers. Yes, Ms. Waters. We have a hearing scheduled 
with her.
    Ms. Waters. Well, I guess one of the things that I am 
taking the opportunity to do is sound the alarm so that we are 
not talking about it after the election what happened and 
investigating. This can be stopped now. We believe it is 
unconstitutional, it is a violation of the Voting Rights Act, 
and we shouldn't linger with this. We got an election coming 
up. And we don't want to see these challenges based on 
foreclosure or natural disasters. Okay?
    Mr. Conyers. The Chair is pleased now to recognize Bill 
Delahunt, the former Massachusetts prosecutor and a Member of 
the Foreign Affairs Committee, as well as Judiciary Committee.
    Mr. Delahunt. Thank you, Mr. Chairman.
    I would welcome Mr. Director. Let me echo the compliments 
that I think Mr. Nadler sent your way earlier. I was watching 
his testimony, and let me say that I am pleased with the report 
of the inspector general regarding the FBI's behavior in terms 
of enhanced interrogation techniques at Guantanamo. And I also 
read the two-part series reviewing the book on The Washington 
Post, and you are to be commended personally, as well as the 
agency.
    Mr. Mueller. Thank you.
    Mr. Delahunt. I would like to just have a conversation for 
my limited time about how do we improve the efficacy of 
oversight in terms of this Committee and the Bureau? I would 
like you to go back to your office and reflect on how together 
we could accomplish that.
    I think you heard the Chair of the full Committee in his 
opening remarks. His frustration was palpable. It is clear that 
the Bureau has a significant investment in how it is perceived, 
not just here in Congress but, more importantly, by the 
American people because, if there is a lack of confidence, it 
is dangerous because the Bureau and the Department of Justice 
are integrated into the judicial branch in some aspects, 
obviously.
    And I share that frustration, and we need timely oversight 
to reassure the public that the Bureau with its power and its 
lack of transparency simply because of its mission in many 
respects is being conducted. I think we have to address that.
    And let me suggest to the Chair----
    Well, before I get to talking to Mr. Conyers, let me note 
that, as you are aware, Mr. Lungren and I have had an interest 
and we have had discussions with you personally on the issue of 
informant guidelines. I appreciate that, and I hope to have 
further discussions with you on that matter.
    But the new attorney general's secret guidelines at this 
point in time, even if they were adopted, what kind of 
assurances will the American people have and this Committee 
that they are being fully complied with? That goes to the 
significance of vigorous, timely oversight. Not that we are 
questioning the integrity of individuals in the FBI, but we 
know from our experience as a democracy that checks and 
balances work; otherwise, we put our democracy at risk.
    But as I was suggesting to you, this format doesn't work--5 
minutes, an appearance once or twice a year by yourself or even 
your designee in an open session. I would ask you to consider 
designating individuals within the Bureau to constantly 
communicate with members of the staff, who will be vetted and 
preapproved by the Chair and the Ranking Member, to maintain a 
constant flow of and exchange of information. There is so many 
issues to attend to, we are busy here, we leave here and we are 
on to something else. A 5-minute rule doesn't work. We are not 
going to get the kind of information that is necessary in a 
short, brief exchange like this.
    And I would encourage the Chair to consider reviewing the 
rules of the Committee, whether it is extending the time for 
questioning, whether it is having staff or individual Members 
interview FBI prior to public hearings so that we know what we 
are getting into, whether it is the creation of a Subcommittee 
under your direction to focus in on specific areas of 
significant concern, as is constantly being brought up here.
    But it is not working, and I am not suggesting that it is 
the responsibility exclusively of the FBI, the Department of 
the Justice or, clearly, this particular director, whom I have 
worked with in the past and for whom I have respect. But it 
isn't working, and I think it is important that we work 
together to ensure that there is vigorous, timely oversight so 
that the American people feel confident that a system of checks 
and balances is working in terms of an agency that, by its very 
nature, operates with limited transparency.
    I, for one, would be willing--I chair Oversight on Foreign 
Affairs. We have different rules there, which basically is we 
have no rules. We just go on and on and on, and Mueller would 
be there for an hour and a half. But I think it is much more 
effective, and I really do think that it is time that we 
reconsider revising our rules and maybe even adding an 
additional Subcommittee that you could appoint a Chair to that 
would report to you directly because it is not working now.
    And with that, Mr. Chairman, I yield back.
    Mr. Conyers. Well, let's invite Director Mueller to make a 
response if he chooses.
    Mr. Mueller. I am going to start by saying, I guess I am 
glad I am in this Committee and not in total anarchy in some 
other Committee. [Laughter.]
    But the--several aspects perhaps. First, in terms of 
questions for the record, I don't care which administration it 
is--and I have been in a number now--you are somewhat always 
going to be frustrated because, whatever administration it is 
wants to do the vetting of the questions that are going in, and 
that takes a long time, and it gets prioritized, and that which 
is important gets vetted early, and that which is perceived by 
others who have to look at it does not. And so, regardless of 
the administration, I think there will be some frustration.
    I do believe that it is important for us and the staff of 
the Congressional Affairs Office and the FBI to work very 
closely with the staff of the Committee, and we have, and we 
have attempted to respond to questions and to provide briefings 
upon request.
    Lastly, I would say that I would be--and have--if there is 
an issue that I can come up and discuss with the Committee as a 
whole or a segment of the Committee that has a particular 
interest in an issue, such as the issue of handling informants, 
I am always to come up and have an informal dialogue for 
whatever it takes to have a dialogue--a discussion--that is not 
in the somewhat formalistic confines of a hearing but in 
addition to a hearing. And so whatever I can do to make it work 
better with the structures we currently have, I am willing to 
try.
    Mr. Conyers. Thank you.
    Attorney Artur Davis, a former member of the Department of 
Justice, from Alabama.
    Mr. Davis. Thank you, Mr. Chairman.
    And I will have to be brief, Mr. Director, as we have a 
vote that has got about 6 minutes left on it.
    But let me try to turn, if I can, to the question of the 
new Attorney General Guidelines. I know you have been asked 
about that, but I wanted to flesh out some areas that are left 
over.
    You probably saw The New York Times story by Eric Lichtblow 
on August 21, and this is his characterization--his phrase--but 
he opens the story by saying that the new standard doesn't 
require, ``a clear basis for suspicion.''
    The Supreme Court and, to my knowledge, no other court have 
ever grappled with the question of the relationship between the 
standard for investigation in a FBI bureau context and, say, 
the relationship between that standard and the conventional 
Terry standard that we have. As you know from your days on the 
street, your days as a prosecutor, Terry v. Ohio states that 
there has to be a clear, articulable basis for a police 
encounter with someone. And that is kind of informally been 
thought to be the standard for opening up some kind of an 
investigation, I suppose, and the departmental context. This 
seems to weaken that standard. So I want you to comment on that 
for a second.
    What, based on your time as a U.S. attorney and your time 
now as director of the Bureau, what do you understand the 
relationship to be between, say, a Terry standard for a police 
encounter and the Bureau's own internal standards for opening 
an investigation?
    Mr. Mueller. I guess I would start by saying I am not 
certain I would agree that the appropriate analogy is a police 
encounter because there is, I believe, some Fourth Amendment--
there is a Fourth Amendment right that attends to a person 
walking on the street, although it is not the same as, quite 
obviously, a search warrant. And I am not certain that is the 
correct analogy.
    I do believe that we open investigations on the criminal 
side with an allegation. It can be a criminal tax case in which 
a spouse says the other spouse is breaking the income tax laws. 
We open an investigation, we do it on that allegation, and it 
may well turn out that it was one spouse trying to get back to 
another----
    Mr. Davis. Well, given time constraints, let me jump in.
    As I understand the plan, as it has been characterized in 
print, agents pursuing national security leads could employ 
physical surveillance, deploy informants and engage in pretext 
interviews. Now, some of those do look a lot like what Terry 
means to guard against, encounters with individuals.
    So do you believe that the new standards create a doctrine 
that is less than the Terry standard of reasonable, articulable 
suspicion?
    Mr. Mueller. Well, it is not a new doctrine. It is the 
ability to employ particular methods at a particular point in 
time with regard to, on the national security side----
    Mr. Davis. I understand.
    Mr. Mueller [continuing]. But tied to----
    Mr. Davis. Is it less than the Terry standard of 
reasonable, articulable suspicion, in your opinion?
    Mr. Mueller. Yes.
    Mr. Davis. And how would you define the new standard?
    Mr. Mueller. It can be an allegation. It can be a threat. 
It can be, for instance, a perceived threat by the U.S. 
government that one particular country is intent on stealing 
its secrets and, therefore, you have to identify the secrets 
that they are going to try to steal and then address the threat 
and identify those persons who are going to--or intend to steal 
the secrets.
    Mr. Davis. Should there be----
    Mr. Mueller [continuing]. Can identify a particular person 
at the point, you know the threat is there. Or I used the 
example previously of western Pakistan, where we know persons 
are going for training in terrorist camps.
    Mr. Davis. But let me jump in again given time constraints.
    Should there be a more protective standard for American 
citizens than non-American citizens?
    Mr. Mueller. I don't believe that is the case. We operate 
within the United States--fully 99 percent of our encounters--
--
    Mr. Davis. I understand that. But should there be a more 
protective standard for an American citizen who might be 
subject to physical surveillance, as opposed to a non-American 
citizen?
    Mr. Mueller. Well, there is that distinction in certain of 
the more intrusive areas, such as interceptions and the like. I 
do not believe at the outset, where you have an allegation or 
you have a threat that you are investigating, that there ought 
to be a more substantial standard.
    Mr. Davis. Well, let me just end this, Director, by saying 
that I think that the problem, frankly, doesn't so much lie 
with your intent. I think you have been an outstanding director 
of the Bureau. The problem, as we know, lies with how 
individual agents may take the new grant of authority. And you 
and I both know that good agents try to push the bounds. And if 
you lower the scope, if you lower the standard, they are going 
to engage in more aggressive conduct.
    It seems there are a lot of open questions here as to 
whether American citizens should be subjected to a more 
protective standard. I would argue they should. And, finally, 
it seems there are very real questions as to exactly how this 
new scope of authority is going to operate and practice, not in 
theory but in practice.
    Mr. Mueller. I meant to point out and should have pointed 
out that there is one area in which you can't collect. You 
cannot collect on a U.S. citizen, for instance, who is--solely 
to monitor First Amendment activities, whatever those First 
Amendment activities might be. Now, that is a different 
standard than for noncitizens.
    But, nonetheless, I do believe that the bar should be 
relatively low in terms of initiating what we call an 
assessment to determine whether or not it is a valid threat or 
not.
    Mr. Conyers. Thank you very much, Mr. Mueller.
    We have in Michigan in the Macomb County the Republican 
Party Chair, Mr. James Carabelli, announcing that they are 
going to examine whether people are using the polls who once 
lived in foreclosed homes.
    We have another issue in which attorney Eric Doster, a 
lawyer for the Michigan Republican Party, who is involved in 
election-day challenges to voters, saying that they intend to 
use the practice of voter caging, in which, based on returns of 
mail, that anybody that fits in to that category, will also be 
challenged.
    Can you help us initiate an investigation into these two 
considerations?
    Mr. Mueller. Our protocol, when it comes to election 
crimes, is to consult with the Department of Justice and put 
the fact pattern that you have described to the Department of 
Justice--I think it is the Election Crime section--and to the 
extent that further investigation is warranted, we will do so 
at the direction of the Election Crimes section.
    Mr. Conyers. Can I be advised of the outcome of that?
    Mr. Mueller. Yes, sir. We will get back to you----
    Mr. Conyers. Between today and tomorrow?
    Mr. Mueller. We will try to do so. We will have to get the 
fact pattern from your staff and then consult with the 
Department of Justice and perhaps have the department get back 
to you. If not, we will get back to you one way or the other.
    Mr. Conyers. Thank you.
    And thank you very much for your attendance today.
    Mr. Mueller. Thank you.
    Mr. Conyers. That ends the Committee hearing.
    Mr. Mueller. Thank you, sir.
    [Whereupon, at 12:11 p.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

       Prepared Statement of the Honorable Sheila Jackson Lee, a 
    Representative in Congress from the State of Texas, and Member, 
                       Committee on the Judiciary
    Thank you, Mr. Chairman, and ranking member, for convening today's 
very important hearing on the oversight of the Federal Bureau of 
Investigation (FBI). The Committee has general oversight jurisdiction 
over the FBI as part of the Department of Justice. There are a number 
of issues relating to the FBI which require congressional oversight, 
including the FBI's use of national security letters (NSLs) and Section 
215 orders for business records, the Sentinel Program, name-checks for 
immigration beneficiaries, and wire-tapping of congressional offices, 
among other issues.
    The FBI was established in 1908 and has approximately 30,341 
employees, 12, 590 of which are special agents. In fiscal year 2007, 
the FBI's total budget was approximately $6.04 billion, including $318 
million in program increases for its counterterrorism, surveillance, 
information technology, forensics, training, and information sharing 
programs.
    The goal of the FBI is to protect and defend the United States 
against terrorist and foreign intelligence threats, to uphold and 
enforce the criminal laws of the United States, and to provide 
leadership and criminal justice services to federal, state, municipal, 
and international agencies and partners. In executing its priorities, 
the FBI produces and uses intelligence to protect the nation from 
threats and to bring to justice those who violate the law.
    The FBI lists ten priorities: 1) protect the United States from 
terrorist attack; 2) protect the United States against foreign 
intelligence operations and espionage; 3) protect the United States 
against cyber-based attacks and high-technology crimes;
    4) combat public corruption at al levels; 5) protect civil rights; 
6) combat transnational/national criminal organizations and 
enterprises; 7) combat major white-collar crime; 8) combat significant; 
9) support federal, state, local and international partners; and 10) 
upgrade technology to successfully perform the FBI's mission.
    Last month, the Justice Department's Office of the Inspector 
General (OIG) released its report on the FBI's use of National Security 
Letters (NSLs) in 2006. OIG stated in that report that since the 
issuance of its March 2007 report, the FBI and the Department have made 
progress in implementing the recommendations from the 2007 report and 
adopting other corrective actions regarding the use of NSL. OIG noted 
that the FBI has issued guidance on the use of NSLs, provided mandatory 
training to FBI employees on the use of NSLs, and developed a new data 
system to facilitate the issuance of NSLs and improve accuracy of NSL 
data in required congressional reports.
    The FBI also created a new Office of Integrity and Compliance to 
ensure that national security investigations and other FBI activities 
are conducted in a manner consistent with appropriate laws, 
regulations, and policies. Importantly, the OIG report noted that the 
policies initiated from top levels did not always adequately filter 
down to the FBI field offices.
    The OIG provided several recommendations for the information to be 
implemented in the field offices. The OIG noted that it was troubled by 
the fact that 11 blanket NSLs issued by headquarters in 2006 that 
sought telephone data on 3,800 telephone numbers did not comply with 
the Patriot Reauthorization Act requirements regarding these 
provisions, internal FBI policy, or both.
    OIG also identified 84 possible intelligence violations involving 
the use of NSLs, of which the FBI determined that 34 needed to be 
reported to the President's Intelligence Oversight Board. OIG also 
found that Section 215 orders were the subject of processing delays. 
These delays were the result of too few resources being allocated to 
handle the requests, a complex review process, and legal questions 
regarding whether the applications met the statutory requirements.
    The March 2008 OIG report also determined that the FBI is the only 
component of the Justice Department that nominates known or suspected 
terrorists for inclusion on the consolidated terrorist watchlist. The 
OIG report has found that the FBI has not been diligent in updating or 
removing information concerning suspected terrorists.
    The FBI runs the National Name Check Program to provide information 
in FBI files to other government agencies requesting information about 
an individual. The United States Citizenship and Immigration Service 
(USCIS) within the Department of Homeland Security and the Department 
of State requests such information for most immigration beneficiaries 
before any either agency grants a benefit. There is a backlog of name 
checks cases that have not been addressed by the FBI.
    The FBI wiretaps came under increasing scrutiny when they picked up 
the voices of several members of Congress in their conversations with 
Congressman Rick Renzi. The wiretaps reportedly were authorized 
pursuant to the FBI's investigation of Congressman Renzi's land deal. 
There has been no indication of any wrongdoing by any member other than 
Congressman Renzi.
    Violent crime is on the rise and Congress under the Bush 
Administration has severely cut federal crime-fighting funds. Since 
2002, the Bush Administration has cut $2 billion from federal crime-
righting funds. The cuts would come from funds for grants to state and 
local law enforcement. Thus, the Administration is dedicating vast 
federal resources to counter-terrorism but it has done so at the 
expense of state and local law enforcement. For example, I have 
implored the head of the Department of Justice, Attorney General 
Michael Mukasey, to investigate the myriad abuses by prison officials 
at the Texas Youth Commission and abuses by the prison officials at 
Harris County Jail. At the Texas Youth Commission there were 
allegations of sexual and physical abuse of children and youth by 
prison officials. In Harris County Jail, prisoners were denied medical 
treatment, access to religious services, and other abuses. Today, I 
would like to know what steps the FBI is prepared to take to curb abuse 
directed at the incarcerated and perpetrated by prison officials.
    Another area of concern with the FBI is the need to address 
contractor abuse. In December 2007, the Crime Subcommittee held a 
hearing in December on the enforcement of U.S. federal criminal laws to 
protect U.S. contractors in Iraq. The hearing was held to address the 
rape of Jamie Leigh Jones by U.S. contractors employed by KBR/
Haliburton. The Department sent no witnesses to the hearing because it 
indicated that it was investigating the matter and has failed to 
respond to several letters issued by the Committee in January.
    Jamie Leigh Jones, from my District in Houston, Texas, testified 
that in July 2005, she was approximately 20 years old, and was on a 
contract assignment in Iraq for KBR/Haliburton, when her fellow male 
contractors drugged, imprisoned, and repeatedly gang-raped her.
    Neither the Department of Justice nor the FBI have brought criminal 
action against the alleged assailants. Despite claims to the contrary 
Title 18, Part I, Chapter 1, Section 7, of the United States Code, 
entitled ``Special maritime and territorial jurisdiction of the United 
States defined,'' the United States has jurisdiction over the 
following: ``any place outside the jurisdiction of any nation with 
respect to an offense by or against a national of the United States'' 
does allow for the Department to prosecute Ms. Jones's alleged 
assailants. I have concerns and questions regarding what the FBI is 
doing about Ms. Jones: why was there a failure to prosecute individuals 
in this case.
    I am also concerned and want answers as to why it taking such a 
long time to address the backlog of name checks with respect to the 
watchlist. Specifically, I want to know why it takes so long to remove 
persons' names from the watchlist when they are wrongfully added--this 
wrongful addition of names disproportionately affects African Americans 
and persons with Muslim sounding names. I would like an explanation of 
the criteria used in adding and removing names from the watchlist.
    Other issues of concern are that the FBI has declined to 
investigate illegal mailers sent to African Americans in Dallas 
threatening criminal punishment if they registered to vote through 
ACORN. The FBI claimed that no federal law was violated.
    These reports of voter suppression surfaced from the election 
primaries in Dallas, Texas. Specifically, there were reports that 
African American voters were sent letters threatening them with 
criminal punishment if they registered to vote. Neither the DOJ nor the 
FBI have taken action. My question is whether the FBI is taking action 
and what the FBI is doing or plans to do to address this recent 
allegation of voter disenfranchisement.
    Mr. Chairman, I look forward to hearing some answers to the 
questions from our distinguished panelist. Mr. Chairman, I yield the 
balance of my time.

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