TOTAL, Increases or Decreases 1973 Compared with 1972 Proposed Authorized Level
SUMMARY JUSTIFICATION OF FY 1973 BUDGET ESTIMATES
The Check Forgery Insurance Fund was established by
the Act approved November 21, 1941 (31 U. S. C. 561) for use
by the Treasurer in making settlement with the payees or
special endorsees of checks drawn on the Treasurer which
have been paid on forged endorsements and it appears that
recovery from those liable may be delayed or be unsuccessful.
The Act authorized an initial appropriation of $50, 000 and
further authorized to be appropriated from time to time such
additional amounts as may be necessary. The sum of $50,000
was appropriated and the Check Forgery Insurance Fund was
established on the books of the Treasury Department on March
24, 1942. In 1964 an additional $50,000 was appropriated as
provided for in the Act and in 1970 the fund was increased to
$200,000 by the appropriation of an additional $100,000.
In recent years the rate of increase in claims involving
paid checks has been out of proportion to the growth of checks
issued. The volume of Government checks processed in fiscal
year 1971 was 16 percent greater than in fiscal year 1967,
whereas the number of claims involving paid checks increased
69 percent during the same period, a major part of which
occurred during the past fiscal year. The increase in claims
has been much greater than anticipated in budget submissions
of the Treasurer during this period. As a result, the number
of unfinished cases on hand has increased from 60 thousand
at the end of fiscal year 1967 to 142 thousand at the end of
December, 1971. The inability of the Treasurer to settle
these claims promptly causes hardship on people who are
totally dependent on the money represented by these claims
and greatly increases follow-up letters from the claimants
and their congressional representatives. This only adds to
the mail burden since time must be devoted to answering this
type of correspondence instead of adjudicating claims.
The experience of this office has led to the development
of a different concept in handling repetitive payment type cases,
which constitute about 80 percent of all claims received. Here-
tofore, the revolving fund has been maintained at a level which
would permit settlement of claims, in advance of recovery from
endorsers, where hardship was made known in the early stages
of the case. Improved service could be made possible and
savings made through the settlement of repetitive payment cases
immediately upon receiving the affidavit of forgery after the
payee has an opportunity to examine a photostat of the check.
This would pick up all the hardships that occur between the time
of the initial claim and the time the photostat was inspected by the
payee, and would reduce appreciably the number of follow-ups
received from the claimants and their congressional repre-
sentatives. If claims are paid promptly, the need for follow-ups
will be dispensed with and the cost of handling them avoided.
The risk of loss is negligible. This procedure will be
applied only in those cases where the check represents a
repetitive payment. That is, the payee gets a check in the
same amount each month from the same source, and the
common law right of set-off can be exercised to recover any
wrong payments. That kind of check represents about 80% of
the total involved in these claims.
To improve service on claims of people dependent on the
money, such as recipients of social security and other annuities,
and eliminate the additional work caused by follow-up letters, an
appropriation of $1,800, 000 for this revolving fund is needed.
A fund at this level would allow a 60 day recovery cycle for the
collection of the amounts of forged checks from the presenting
banks and the repayment of such amounts to the fund.
CHECK FORGERY INSURANCE FUND
To increase the capital of the "Check Forgery Insurance Fund", in
accordance with section 1 of the Act approved November 21, 1941 (31
U.S.C. 561), $1,800,000, to remain available until expended.
STATEMENT OF HON. MARY BROOKS, DIRECTOR OF THE MINT
WILLIAM L. DICKEY, ACTING ASSISTANT SECRETARY, ENFORCEMENT, TARIFF AND TRADE AFFAIRS AND OPERATIONS FRANK H. MacDONALD, DEPUTY DIRECTOR OF THE MINT BEN C. HOLLYFIELD, FINANCIAL MANAGER
NORMAN E. SIMS, JR., DIRECTOR, OFFICE OF BUDGET AND FINANCE
For necessary expenses of the Bureau of the Mint, including purchase of one passenger motor vehicle for replacement only; and not to exceed $2,500 for the expenses of the annual assay commission; [$25,000.000] $23,300,000. (5 U.S.C. 7901; 31 U.S.C. 251-287; 84 Stat. 1769; Treasury Department Appropriation Act, 1972.)
Reimbursements from non-Federal sources above are receipts from foreign coinage (31 U.S.C. 367) (Jan. 29, 1874, Stat. 6); and proceeds from sale of medals and proof coins, and uncirculated coin (31 U.S.C. 369) (as amended Sept. 5, 1962.76 Stat, 440).
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