Where's The Money?

(CBS)  Russa Steiner has faced mountains of bureaucracy since her husband died in the World Trade Center, reports CBS News Correspondent Howard Arenstein.

"The majority of creditors have shown some compassion," she testified on Capitol Hill Tuesday. "I have also had to deal with dunning notices and threats to incur additional collection activities."

She has received a series of relatively small assistance checks from various charities. Elizabeth McLaughlin has a similar story.

"I don't think contributors to the various Sept. 11 funds thought that their donations would be caught up in so much red tape and become such a source of frustration for the families," she said.

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

Healy, a medical doctor, is a health contributor to the CBS News Early Show.

AP

Elizabeth McLaughlin, after completing her emotional testimony

---

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. 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."

Rep. Billy Tauzin, R-La., interrupted.

"What's at issue here is that a separate fund was established for these families," he said, pounding the table. "We are hearing from families that their needs are not being met."

Steiner said left her children behind as she went from charity to charity, asking for money.

"I did not want to subject them to the continuing pain of retelling our story, explaining our financial status or be subjected to asking for handouts," she said.

"Unfortunately, we failed Mrs. Steiner and there is no excuse for that," admitted Healy.

Controversy over the fund was one factor in Healy's resignation.

Donations to the Red Cross usually go to a general disaster relief fund. But Healy took the unusual step of setting up a separate relief fund for the terrorist attacks.

The various charities have raised $.2 billion so far, but getting any of it is difficult.

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 nine-month-old son.

She told the panel that charities need to adopt a uniform application.

"We all have missing person reports, death certificates and any other proof needed to avoid fraud, but the charities are not sharing this information with each other," she said.

New York Attorney General Eliot Spitzer also urged Congress to pressure the charities to complete a computer database that will help coordinate donations and to better disclose fund-raising practices.

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.

Since Sept. 11, 25,000 families have received those benefits, averaging about $25,000 per household. Some 500 households have turned down Red Cross aid, Red Cross vice president Bill Blaul said.

The Liberty Fund has paid out a total of $121 million in direct cash assistance to victims and their families. Red Cross officials said that was more than any other charity.

It also has spent $6 million on administrative costs and overhead and will spend $50 million from the fund to set up a strategic blood reserve. Another $14.7 million has been spent on community outreach, such as brochures on anthrax and mental health counseling available for children.

And the charity is establishing a $264 million reserve to pay for future terrorism-related response — such as the ongoing anthrax threats — once the needs of the World Trade Center and Pentagon victims are met, Blaul said.


©MMI CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report