after them. This has proven to be the case, over and over and over and over again, and it is basically what the bill is calling for.

Second, I have problems with the bill because it proposes to do away with surety bonds and surety bonds have proven to be economically very, very feasible. All of the services performed by the corporate surety and their agents are at no expense to the Government. There are over 15,000 insurance agents in America who write surety bonds.

Each of those-we did a survey-each of those agents has over four employees in his office. There are 60,000 people in the private sector today doing what this portion of the bill says the Government could be doing. I do not want to get into any free enterprise arguments but we are basically talking about putting an awful lot of people out of business. They are people who are performing a service.

Senator HATCH. In your statement you make some good points, I think, about how either the private sector pays for it or you can escalate the public sector and have more bureaucracy. I think I have your second point here.

Mr. WATSON. OK, sir.

Senator HATCH. Could you make your conclusion and then let me ask you a couple of questions?

Mr. WATSON. Yes, sir.

Senator, I will not even read my conclusion.

Senator HATCH. OK.

Mr. WATSON. I will just say that we have done some calculating, and based upon available data to hand I have made what I consider to be a conservative estimate of what this bill is going to cost the taxpayers. It is going to cost the taxpayers upwards toward $100 million per year.

Senator HATCH. You consider that a conservative estimate?

Mr. WATSON. I consider it a very conservative estimate because over $50 million a year is being collected by the Federal courts in forfeitures on Federal bonds written by sureties now.

Senator HATCH. At the outset I would like to ask you the same question that we posed earlier to the Justice Department: If a surety shows up at a courtroom and learns for the first time that the suspect is not present, the current law would possibly result only in the bond being forfeited. Should the law allow a court the discretion of postponing the forfeiture date on the bond for a few days to allow the surety to bring the fugitive into court? Do you think in most instances that this would give the surety some incentive to find the defendant on his own?

Mr. WATSON. Mr. Chairman, it certainly would provide the surety with some incentive to go and get the defendant and retrieve him and bring him back but I think there is a better way to handle that problem. We have proposed an amendment to this bill. The amendment would call for a statutory remittance of a portion of what the surety had paid on the forfeiture if the surety retrieves the defendant and brings him back within a certain timeframe.

I think it would actually work better, rather than to give some time in there, I think it would actually work better-

Senator HATCH. That sounds like a good amendment.

Mr. WATSON. Yes, sir. Just go ahead and forfeit the bond when the man is due to appear, and if he fails to appear, the bailiff calls his name three times and if he does not show up, forfeit the bond. The Government-except for one case that I tried about 3 weeks ago in Los Angeles, it took the Government over 2 years to move for judgment on a $100,000 bail bond forfeiture of one of my clients-but usually on a large bond the district attorney's office will move for final judgment very quickly. Most Federal courts want the money within 10 days after judgment.

One other thing along those lines, and perhaps you are aware of this and perhaps you are not: The incentive for the surety to pay the Federal bond when the court wants the money is that if the surety does not pay the Federal bond when the court wants the money, the surety's name automatically is stricken from the Federal Treasury list and they can no longer write Federal bonds.

Consequently, I think the better practice would be to let the judge forfeit the bond, let the Government move immediately for judgment, have a show-cause hearing as to why the forfeiture should not become a final judgment, and then within 10 days after judgment make the surety pay but give the surety a guaranteed remittance if they go get that man and bring him back.

Senator HATCH. Sure.

Prof. Dan Freed of Yale Unversity Law School gave the subcommittee what we thought was some very valuable testimony last month. He basically stated that some of the difficulties with the current money bail practices, one of the difficulties with the current money bail practices is that the traditional concept of surety has changed.

He noted that early in our history a surety served without pay and vouched for the character of the defendant, and affirmed that he would see that the defendant stood trial. This surety was usually a family member who could control to some degree the behavior of the suspect. In other words, the surety stood to gain nothing and to lose everything. Therefore, he monitored carefully the activities of the suspect. Today, however, he says that the bondsman is paid and does not even know the suspect.

Do you feel that the law should contain some kind of a provision to ensure that today's bondsmen exercise the same degree of care shown by the classical surety? For instance, should the surety be required to forfeit a portion of his bond if the suspect commits another crime while in his care?

Mr. WATSON. I understand there to be two questions within the question, Senator.

Senator HATCH. Right.

Mr. WATSON. The first one, I think Professor Freed-and I respect his judgment and I know that he is well researched-I think he has answered the question for me because he says that in the early days of classical surety relationships this was generally a blood relative. The bondsman does not have that distinct advantage in controlling the behavior of the accused while he is out awaiting trial.

As to whether or not the bondsman should be made or the corporate surety should be made to forfeit a portion of the face amount of the bond in the event that the accused becomes a recidivist, no,

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PREPARED STATEMENT OF JERRY WATSON

Mr. Chairman and members of the Subcommittee:

Thank you for the opportunity to submit for your consideration this statement in opposition to S. 1554.

My name is Jerry W. Watson. I am an attorney from Dallas,
Texas and Los Angeles, California, and I am submitting this
statement in behalf of:

Professional Bondsmen of The U.S., an Association,
Allegheny Mutual Casualty Company of Pennsylvania,
International Fidelity Insurance Company of New Jersey,
Accredited Surety And Casualty Company of Florida, and
Indemnity Insurance Company of North America of Pennsylvania.

For the past twelve years I have represented insurance companies across America who are in the business of serving as corporate sureties on bail bonds. I also represent many insurance agents in the bonding industry as well as State-wide and National Associations of such agents. I have served as counsel for these parties before various governmental bodies including the U.S. Treasury Department, The Federal Trade Commission, many State Insurance Boards and numerous Federal and State Courts.

I believe my background qualifies me to speak to the actual effects that would result from the passage of S. 1554 as drafted. Having read with interest the statements of others who have appeared before you on this matter, I think my statement might be unique in this respect.

Taking, therefore, the pragmatic and empirical viewpoint, as opposed to the academic or philosophical, my address will be very brief and to the point. It is as follows:

S. 1554 intends to reduce danger to the community. It assumes the falsehood that elimination of Surety bonds will help. The truth is that disallowing Surety bonds is the very most certain way to defeat the high purpose of the Bill and its sponsers.

This is true for several reasons, and the reasons are:

I. SURETY BONDS WILL WORK. THE S. 1554 ALTERNATIVE WILL NOT.

A. SURETY BONDS.

Before a Surety agent writes a bond in favor of the U.S.
he obtains exhaustive information on the accused, his
relatives and those close to him. If the accused is a
transient or unemployed, the bond would not generally be
written. He secures the bond by having something of
value pledged as security, and he has third persons exe-
cute agreements of indemnity. He runs very tight con-
trol on the accused, insisting among other things on
regular personal check-ins. He monitors the case of
the accused, and he insists that the accused be at all
times represented by counsel. He notifies the accused
of all his Court dates, and takes steps to assure that
all appearances are made.

If, despite all this, the accused does not appear as
directed, the Surety agent goes to great lengths and
pays all expenses necessary to retrieve the accused
and arrange for his surrender to the proper authorities.

The Surety agent knows full well that all these steps are necessary to prevent his having to pay to the U.S. the full amount of the bond should it go forfeit. incentive for diligence is quite sufficient.

The

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