Red Cross under fire for handling of relief money

Associated Press and Washington Post

WASHINGTON — Lawmakers sharply criticized outgoing American Red Cross President Bernadine Healy on Tuesday for not directing more of the money in a special terrorism response fund to the families of victims in the Sept. 11 attacks.

The charity set up the Liberty Fund, which has raised $564 million, to respond to the attacks on the World Trade Center and the Pentagon; $121 million already has been paid directly to families.

Donations to the Red Cross usually go to a general disaster relief fund.

Red Cross officials now say some of the money will be set aside in case of future terrorist acts and used to create a strategic blood reserve.

At a hearing of the House Energy and Commerce Committee’s oversight panel, lawmakers said the American public responded so generously because they believed all of their donations would directly benefit those harmed in the terrorist attacks.

Healy said the Red Cross always made clear that was not the case — that some of the money would be used for "future critical priorities."

"That’s not what people gave for," countered Rep. Bart Stupak, D-Mich. They gave for direct help to families and victims, Stupak said.

"What’s at issue here is that a separate fund was established for these families," said Rep. Billy Tauzin, R-La., pounding the table. "We are hearing from families that their needs are not being met."

Two widows who lost their husbands in the World Trade Center attacks described for lawmakers the bureaucratic maze they have faced in securing some of the $1.2 billion raised so far by various charities.

Among those testifying was Russa Steiner of New Hope, Pa., whose husband, William, died in the World Trade Center collapse. Until Tuesday, Steiner — who has three children in college — had received about $1,300 from the Red Cross after applying Oct. 6.

However, hours before the hearing, the Red Cross gave her a check for about $27,000. "We screwed up," Healy said.

A tearful Elizabeth McLaughlin of Pelham, N.Y., said she has had to construct an 18-page spreadsheet just to keep track of the different aid requirements as she cares for her 9-month-old son.

"I don’t think contributors to the various September 11th funds thought that their donations would be caught up in so much red tape and become a source of frustration to families," said McLaughlin, who said she received close to $30,000 promptly from the Red Cross but expressed surprise that some donations might be reserved for as much as two years.

Earlier Tuesday, the Red Cross said it may extend cash assistance to help victims and their families pay bills beyond the customary three months — to six months or possibly longer.