[Congressional Record Volume 140, Number 36 (Friday, March 25, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 25, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                               WHITEWATER

  Mr. NICKLES. Mr. President, I wish to speak this evening on a couple 
of issues, one of which is a subject that has received a lot of 
attention, and that deals with Whitewater and the fact that there are a 
lot of questions that have not been answered.
  I spoke some time ago about many questions that have been asked by 
the media, by other organizations, by Republicans, by concerned 
individuals--some questions on Whitewater. The President may have 
touched on one of those last night, but there are a lot of questions 
that still have not been answered that need to be answered.
  I will refer to the meeting on February 2 that was arranged by Mr. 
Altman, the acting head of the Resolution Trust Corp., to give the 
White House a Heads-up about RTC's criminal referring of Madison 
Guaranty.
  Instead of answers we received accusations, accusations of 
partisanship. Instead of being forthcoming with answers and 
information, the President accused Republicans of ``an overriding-
negative, intensely personal, devoid-of-principle attack.'' Those are 
the President's words.
  Having engaged in a little political combat now and then, the 
President's comments remind me of an old political tactic. When you 
cannot respond or do not want to respond to an accusation, then attack 
the accuser. That is what he did in this case.
  Not a single Republican Member of the Senate, to my knowledge, has 
accused the President of any wrongdoing or any criminal activity. What 
we have asked for is the appointment of a special counsel, which 
finally was agreed upon, and also for a congressional investigation, to 
which, I am glad to say now, that the Members of both the House and the 
Senate have agreed. We have not set the time. The reason we have asked 
for congressional hearings is just to get the facts. It is not to put 
anybody in jail. It is to find out answers to questions. In my opinion 
that is not partisanship, that is called doing our job.
  Between the years 1980 and 1992--I was elected in 1980--Congress 
conducted investigations, conducted hearings, including hearings and 
investigations into 25 specific allegations of wrongdoing within the 
administration. On four occasions those investigations were instigated 
by a Republican majority in the Senate.
  Many of my colleagues on the other side of the aisle said we should 
not hold hearings because it might interfere with the work of the 
special counsel. The special counsel has also expressed concern about 
the effect that hearings might have on his investigation. I find it 
quite ironic that some of my colleagues oppose hearings. If history has 
taught us anything in recent years, it is that congressional hearings 
actually help, not hinder, the work of the special counsel.
  Take the Watergate scandal, for example. It was at a congressional 
hearing that we learned of the presence of the White House tapes. The 
contents of those tapes eventually led to President Nixon's 
resignation. And it was an RTC oversight hearing by the Banking 
Committee, chaired by Chairman Riegle, and by the ranking member, 
Senator D'Amato, that revealed the February 2 meeting between RTC 
officials and the White House that was clearly improper. The meeting is 
also now being investigated by the special counsel, thanks to the 
information revealed at that hearing.

  On three occasions during the 1980's, this Congress held hearings or 
conducted investigations concurrent with investigations by an 
independent counsel. But the most important reason for hearings is 
because it is our constitutional responsibility to provide a check and 
balance over the executive branch.
  We have also heard the President say, ``We are not covering up. We 
are opening up. We are disclosing. We are giving you information.'' He 
said that at a White House press conference in response to a reporter's 
question. He alluded to it last night.
  Why, then, does the President refuse to disclose the information that 
was held in Mr. Foster's office after his death for almost 6 months? 
That information has now been turned over to the special counsel, but 
it has not been released to the public. Those are Whitewater files. 
Those are files that have direct bearing on this entire issue that now 
the media and everyone is so concerned about. It would answer a lot of 
the questions I am going to be raising tonight. But it still has not 
been disclosed.
  What about the issue of taxes? The President just released today his 
tax returns for 1978 and 1979. He did so under pressure, because people 
were asking questions. And finally he released them.
  What about the income tax forms? I wonder if most people are aware 
that Whitewater did not file income tax returns for 3 years?
  Filing your income tax, if you are a corporation, if you are a 
company, if you are an individual, is not an optional issue. You have 
to file your income tax. But the Whitewater corporation did not file 
its income tax.
  Who owned Whitewater? The McDougals and the Clintons. We understand 
the Clintons owned half of Whitewater, but they never have said how 
much money they invested in the corporation. Again, this is information 
we need to find out.
  How much did they invest? Is that a Republican question? No, that 
question was asked by the New York Times. How much money was invested 
and how much money was lost? The President alluded to it last night. He 
said we lost $20,000 less than what Mr. Lyons' report--that was done in 
1992--said we lost. It said the Clintons lost about $69,000. Mr. 
Clinton said it was $20,000 less than that, but still never said how 
much money was invested.
  How much money did they make? How much money did they lose? Those 
facts have not come out and they need to come out.
  We need to get the information on those files. That information, 
presumably, was in Mr. Foster's office, because he filed income tax 
returns.
  We had 3 years that Whitewater corporation did not file income tax 
returns. Mr. Lyons' report did not reveal that. Mr. Lyons' report was 
done, presumably, to put Whitewater behind candidate Bill Clinton in 
1992. But he forgot to mention the fact that Whitewater did not file 
income tax returns for 3 years. And maybe for good reason, I do not 
know. But I do not think there is a good reason. It happens to be 
against the law not to file income tax returns.
  I do not like filing them. You are going to have a lot of 
constituents in West Virginia and Oklahoma and in a lot of places that 
kind of get in a bad mood because it is income tax time. We are rolling 
into income tax time. I have a brother-in-law who is a CPA. This is a 
busy time for him. People have to file their income tax, or at least 
get an extension, but they did not get an extension in Whitewater. They 
just did not file them for 3 years. As a matter of fact, Mr. Foster, 
who was working in the White House, filed the delinquent returns. That 
was one of the things he did shortly before his death. As a matter of 
fact he was working on Whitewater, according to news reports, on the 
day that he died.
  So there was a lot of Whitewater information that was in Mr. Foster's 
office that was not revealed to the public; as a matter of fact, 
supposedly was held by the White House for several months before it was 
even disclosed. Keep in mind, the U.S. attorney in Arkansas was 
conducting an investigation on Whitewater, but this information was 
never turned over to the U.S. attorney until there was a hue and cry 
from a lot of people saying this information should be made public.
  President Clinton, in the middle of December said, ``Well, we will 
turn it over.'' But he did not turn it over until January 18. Then he 
only turned it over under the disguise, I guess, of a subpoena so that 
information would not be made public. He turned thousands of pages of 
documents concerning Whitewater over to the special counsel, but under 
the form of a subpoena, therefore, the information would not be made 
public and it is still not made public.
  That is one of the things that should be made public. People need to 
find out in the Whitewater files how much money was invested; how much 
money was made; how much money was lost; was there coercion?
  Mr. Hale, David Hale, has testified that Governor Clinton put 
pressure on him to make a $300,000 loan to Mrs. McDougal who was a 
partner in Whitewater. He was head of a corporation, of a capital 
company that was supposed to make loans to low-income groups, an SBA-
type loan, making loans to individuals that could not get money from 
ordinary banks to help disadvantaged people. That was the purpose of 
the SBA-type loans.
  Frankly, the McDougals nor the Clintons would qualify. As a matter of 
fact, Mrs. Clinton, according to news reports, made right at $100,000 
dealing with commodities, so certainly would not qualify for low-income 
or a disadvantaged-type loan, but yet he did loan them $300,000. He 
loaned Mrs. McDougal $300,000; $100,000 of that money ended up in 
Whitewater Corp. which was owned, according to the press, 50 percent by 
the Clintons. Neither the Clintons nor the McDougals are eligible to 
participate in that loan. Mr. Hale says he was pressured by Governor 
Clinton to make that loan. He stated it such.
  Questions need to be answered. Those questions have been raised, they 
need to be answered. They have not been answered yet.
  Mr. President, the New York Times on February 27 raised another 
fundamental question arising from the review of transactions involving 
Madison Guaranty and Whitewater: Was Madison used to convert campaign 
funds to personal funds? That is a good question. We need an answer.
  Mr. President, the President downplays the whole Whitewater matter by 
insisting that, and I quote, ``there is no credible evidence and no 
credible charge'' that he violated any criminal or civil Federal law.
  That is a very artfully worded sentence, Mr. President. The words 
``credible evidence'' and ``credible charge'' are carefully chosen, but 
serious allegations and questions have been raised, not by the 
President but by former political associates of the President and by 
news organizations.
  It was the New York Times, not Republicans, who asked whether Madison 
was used to convert campaign funds to personal funds for then Gov. Bill 
Clinton.
  It was the New York Times, not Republicans, who asked whether Bill 
Clinton paid the same amount of money for their half share of 
Whitewater that their partner, James McDougal, paid for his.
  It was the New York Times, not Republicans, who asked about possible 
improprieties involving Hillary Rodham Clinton and the Rose law firm.
  Mr. President, I do not think any of my colleagues believe the New 
York Times editorial staff is in the back pocket of Republicans.
  If the President and the White House is opening up, as they claim, 
then why are these questions not being answered? That is why we need 
hearings. President Clinton has done a good job coming to the defense 
of the First Lady, but laying politics aside, there are serious 
questions about her role in this matter that should be looked into by 
this Congress, questions not raised by Republicans but by credible news 
organizations, including the Washington Post.
  Did Mrs. Clinton's efforts on behalf of Madison help prompt Arkansas 
State regulators to go easy on that failing savings and loan?
  Did Mrs. Clinton get the power of attorney she was looking for over 
all Whitewater affairs back in 1987?
  And what happened to all the Whitewater records that she asked be 
delivered to the Governor's mansion in 1987? I might mention that Mr. 
McDougal said that he sent all the papers to the Governor's mansion, 
but yet those papers have not been made public, and we continue to 
hear, ``Well, those papers aren't available,'' or ``They can't be 
found.''
  This is not a partisan issue. Growing numbers of Americans believe 
the President did something seriously wrong in Whitewater. The same is 
true for Mrs. Clinton. The White House and Treasury Department aides 
have been subpoenaed by the special counsel. I fear, as the President 
probably does or obviously does, that this matter will preoccupy the 
White House and the country at the expense of issues that matter to 
real Americans, issues like crime and health care, welfare reform, and 
the need to get our Federal deficit under control.
  I think it is important that we do work together. I think it is 
important that we work together on issues that are important, but we 
need some answers to questions.
  Here is a Wall Street Journal article of March 14 that asks several 
different questions. These questions have yet to be answered. They were 
not answered last night by President Clinton and they have not been 
answered yet. I will include them into the Record.
  Our colleague, Congressman Jim Leach yesterday made a speech where he 
asked a lot of questions, where he made statements, where he raised 
concerns and also made some comments concerning facts. I will take a 
few excerpts from his speech. He made a very lengthy speech and I will 
not put that in its entirety into the Record, but I will raise some of 
the highlights that have been mentioned by Congressman Leach.

  He said:

       Perhaps laws have not been broken, but seldom have private 
     and public ethics of professionals in the White House and 
     executive departments and branch agencies been so thoroughly 
     devalued.
       The point of all this is that there is a disjunction in 
     this administration between public policy and private ethics. 
     What is also extraordinary is the absence of simple truth.
       Administration claim: Whitewater caused no losses to 
     Madison.
       Fact: As reflected in the minority-developed charts and 
     evidence by supporting documentation, Madison and affiliated 
     companies transferred significant resources to Whitewater. In 
     addition to being a modest sized real estate company, with a 
     cash flow derived from land sales, Whitewater appears to be 
     one of a dozen so companies with direct or indirect access to 
     Madison and its taxpayer guaranteed deposits.
       Administration claim: The Clinton's lost money in 
     Whitewater.

  President Clinton mentioned this last night, although he did say he 
did not lose as much as previously reported. Again, this is Congressman 
Leach's statement.

       Fact: To have lost money in Whitewater implies that the 
     Clintons invested sums which were unrecovered. Their 
     Whitewater partner, James McDougal, claims at most the 
     Clintons over the years put in $13,500 in Whitewater. The 
     minority has provided evidence that one land transaction 
     alone returned more than this amount to the Clintons and 
     published reports indicate tax deductions of some value were 
     taken. The Lyons report, as well as the review of the land 
     sales, indicates substantial sums were taken out of 
     Whitewater over the years.
       Administration claim: The President and his staff would 
     fully cooperate with Congress.
       Fact: The executive branch is actively working to prevent 
     full disclosure of documents and committee access to 
     witnesses.
       Administration claim: It has done nothing done in relation 
     to the RTC investigation into the failure of Madison and is 
     fully cooperating with Special Counsel Fiske's probe.
       Fact: Officials of an independent regulatory agency (the 
     RTC) immediately notified the White House of the probe of 
     Madison by its Kansas City office and attempted to put in 
     place procedural techniques to undercut the traditional 
     independence of its regional offices.
       Fact: On September 29, 1993, before the new criminal 
     referrals were sent to the Justice Department, Treasury 
     General Counsel Jean Hanson briefed the White House counsel 
     on them. Nine days after the meeting, the referrals were sent 
     to the Justice Department. On October 14, Jean Hanson with 
     Secretary Bentsen's press secretary and chief of staff met 
     with Presidential advisers ostensibly to discuss press 
     inquiries related to Madison Guaranty.
       Fact: On February 2, right after the appointment of Special 
     Counsel Robert Fiske, Roger Altman gave the White House a 
     ``heads up'' briefing on Madison. At the Senate oversight 
     board hearing, Roger Altman revealed his February 2 meeting, 
     but no others.
       Fact: After the appointment of Special Counsel Fiske, 
     Washington RTC officials imposed censorship guidelines on 
     Kansas RTC employees. No discussion with Fiske could be made 
     without going through Washington. No meetings between Kansas 
     City office and Fiske could take place without accompaniment 
     of Washington officials. No materials could be forwarded 
     without going through Washington. All information concerning 
     the attorney-client privilege was to be redacted, with 
     Washington RTC determining the scope.
       Administration claim: No fund raising improprieties 
     occurred.
       Fact: On April 4, 1985, Jim McDougal hosted a fundraiser 
     for Governor Clinton. The Clintons repeatedly asked McDougal 
     to host the fundraiser to pay off the $50,000 personal loan 
     that Clinton had taken out in the final weeks of his 1984 
     campaign. The question at issue is whether some of the money 
     appears to have been diverted from Madison Guaranty, which 
     would then, with the failure of Madison, imply deferred 
     Federal financing of gubernatorial election. For example, one 
     cashier's check for $3,000 was made in the name of Charles 
     Peacock III, then a 24-year-old college student who disclaims 
     any knowledge of having made the contribution. Mr. Peacock's 
     father was a major Madison borrower and served at one time on 
     Madison's board.

  Mr. President, I could continue. I will enter these two pages 
concerning Mr. Leach's statement. But my point is there are a lot of 
questions that have been raised. The President gave a very eloquent 
performance last night, but he did not answer hardly any of the 
questions. Maybe it is not possible to do that in 30 minutes. But these 
questions need to be answered. They need to be resolved. The American 
people are entitled to have answers to these very important questions.
  Mr. President, I ask unanimous consent to insert these two pages to 
which I have referred, as well as the questions in the Wall Street 
Journal article, in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       In a Nutshell, Whitewater Is About the Arrogance of Power

       Excerpts from the statement by Rep. Jim Leach, Iowa 
     Republican, on the House floor yesterday.
       ``Constitutionally, it is the duty of Congress to oversee 
     breaches of law or public ethics in the executive branch.  .  
     .  .
       If the majority party refuses to uphold its 
     responsibilities because of political embarrassment to its 
     party's top elected official, the minority party is left with 
     the choice either of joining in a complicity of silence or 
     pursuing investigations that run the danger of being 
     partisan.  .  .  .
       On the landscape of political scandals Whitewater may be a 
     bump, but it speaks mountains about me-generation public 
     ethics as well as single party control of certain states and 
     the U.S. Congress.
       In a nutshell, Whitewater is about the arrogance of power--
     Machiavellian machinations of single-party government. It all 
     began in the late 1970s when a budding S&L owner named James 
     McDougal formed a 50-50 real estate venture with a young 
     politician, the then-attorney general of Arkansas, Bill 
     Clinton. In this venture called Whitewater, the S&L owner and 
     S&L affiliated entities provided virtually all, perhaps all, 
     the money; the governor-in-the-making provided his name.
       Over the years, the company received infusions of cash from 
     the S&L as well as from a small business investment 
     corporation which diverted, allegedly at the governor's 
     request, federally guaranteed funds from a program designed 
     for socially and economically disadvantaged people to the 
     governor's partners and thence, in part, to Whitewater.
       Some of these funds were used to pay off personal and 
     campaign liabilities of the governor; some to purchase a 
     tract of land from a company to which the state had just 
     given a significant tax break. Whitewater records have 
     apparently been largely lost.
       A review of the numerous land transactions, however, raises 
     questions of what happened to the money that came into the 
     company and a review of the president's tax records raises 
     questions about tax deductions that were taken and income 
     that may not have been declared.
       Under the governorship of Bill Clinton. Jim McDougal was 
     named a gubernatorial aide to serve principally as liaison to 
     the Economic Development, Commerce, and Highway and 
     Transportation departments; the first lady of Arkansas was 
     hired to represent the S&L before state regulators; the 
     president of the S&L was placed on the state S&L commission; 
     and attorney who represented the S&L was named the state S&L 
     regulator; the S&L received rent from state agencies; 
     Whitewater had roads constructed using a state agency program 
     and state funds; and the S&L was allowed to operate, despite 
     being insolvent for an extended period, providing millions in 
     loans and investment dollars to insiders and the Arkansas 
     political establishment.
       Under the governorship of Bill Clinton, the S&L was allowed 
     to grow 25-fold until federal regulators forced its closing, 
     at which time taxpayers picked up the tab for losses that 
     amounted to approximately 50 percent to the institution's 
     deposit base. * * *
       The story of Whitewater is thus part and parcel the story 
     of the greatest domestic policy mistake of the century--the 
     quarter trillion dollar S&L debacle. It is the story of a 
     company which in one sense was a simple real estate 
     development venture, but in another was a vehicle used to 
     spirit federally insured deposits from an S&L and compromise 
     a significant political figure. * * *
       In our kind of democracy ends simply don't justify means. 
     Just as a conservative, who may despise government, has no 
     ethical right not to pay taxes, a liberal has not ethical 
     basis to put the public's money in his own or his campaign's 
     pocket just because he may have the arrogance to believe his 
     is advancing a political creed that is in the public's 
     interest. * * *
       Much press attention has centered in recent weeks on the 
     revelations of improper contact between employees of 
     independent federal agencies and the White House. The 
     question of whether a ``heads up'' was appropriate is of 
     significance. More so, is whether the line between a ``heads 
     up'' and ``cover-up'' was crossed.
       By background, for several years a group of criminal 
     investigators for the RTC in Kansas City [Mo.] reviewed the 
     failure of Madison Guaranty Savings and Loan in Little Rock 
     and came to the conclusion criminal referrals were 
     appropriate. In the last week of September 1993, they sent 
     copies of their referrals to Washington. Within a few days of 
     receipt of the referrals from the Kansas City office, RTC 
     Washington officials visited the White House.
       Within a few weeks, in an unprecedented change of 
     procedure, Washington demanded to review all Madison 
     referrals. Within a few months, a senior Kansas City criminal 
     investigator was removed from the case. Within a few more 
     months, officials from RTC Washington visited Kansas City to 
     pass on the determined message that senior RTC officials in 
     Washington wanted it understood that they wished to claim 
     Whitewater was not responsible for any losses at Madison.
       The briefing of the White House by high-ranking Department 
     of Treasury and RTC employees must be understood in the 
     context of the development and transmittal to the Justice 
     Department of these referrals and in the context of the 
     possibility Kansas City was in the process of developing 
     further referrals. * * *
       The revelations that U.S. government officials briefed key 
     White House aides on potential legal actions which 
     independent regulatory agencies might be obligated to take 
     implicating but not charging the president and first lady 
     subvert one of the fundamental premises of American 
     democracy--that this is a country of laws and not men.
       In America no individual, whatever his or her rank, is 
     privileged in the eyes of the law. No public official has the 
     right to influence possible legal actions against him or 
     herself. For this reason, agencies of the government as well 
     as the White House have precise rules governing employees. * 
     * *
       Perhaps laws have not been broken, but seldom have the 
     public and private ethics of professionals in the White House 
     and executive departments and branch agencies been so 
     thoroughly devalued.
       The point of all this is that there is a disjunction in 
     this administration between public policy and private ethics.
       What is also extraordinary is the absence of simple truth.
       Administration claim: Whitewater caused no losses to 
     Madison.
       Fact: As reflected in the minority-developed charts and 
     evidenced by supporting documentation, Madison and affiliated 
     companies transferred significant resources to Whitewater. In 
     addition to being a modest-sized real estate company, with a 
     cash flow derived from land sales. Whitewater appears to be 
     one of a dozen [or] so companies with direct or indirect 
     access to Madison and its taxpayers guaranteed deposits.
       Administration claim: The Clintons lost money in 
     Whitewater.
       Fact: To have lost money in Whitewater implies that the 
     Clintons invested sums which were unrecovered. Their 
     Whitewater partner, James McDougal, claims at most the 
     Clintons over the years put in $13,500 in Whitewater. The 
     minority has provided evidence that one land transaction 
     alone returned more than this amount to the Clintons and 
     published reports indicate tax deductions of some value were 
     taken. The Lyons report, as well as a review of land sales, 
     indicates substantial sums were taken out of Whitewater over 
     the years.
       Administration claim: The president and his staff would 
     fully cooperate with Congress.
       Fact: The executive branch is actively working to prevent 
     full disclosure of documents and committee access to 
     witnesses.
       Administration claim: It has done nothing wrong in relation 
     to the RTC investigation into the failure of Madison and is 
     fully cooperating with Special Counsel Fiske's probe.
       Fact: Officials of an independent regulatory agency [the 
     RTC] immediately notified the White House of the probe of 
     Madison by its Kansas City office and attempted to put in 
     place procedural techniques to undercut the traditional 
     independence of its regional offices.
       Fact: On Sept. 29, 1993, before the new criminal referrals 
     were sent to the Justice Department, Treasury General Counsel 
     Jean Hanson briefed White House Counsel on them. Nine days 
     after the meeting, the referrals were sent to the Justice 
     Department. On Oct. 14, Jean Hanson, with [Treasury] 
     Secretary [Lloyd] Bentsen's press secretary and chief of 
     staff, met with presidential advisers ostensibly to discuss 
     press inquiries related to Madison Guaranty.
       Fact: On Feb. 2, right after the appointment of Special 
     Counsel Robert Fiske, Roger Altman gave the White House a 
     ``heads up'' briefing on Madison. At the Senate Oversight 
     Board hearing, Roger Altman revealed his Feb. 2 meeting, but 
     no others.
       Fact: After the appointment of Special Counsel Fiske, 
     Washington RTC officials imposed censorship guidelines on 
     Kansas City RTC employees. No discussion with Fiske could be 
     made without going through Washington. No meetings between 
     Kansas City office and Fiske could take place without 
     accompaniment of Washington officials. No materials could be 
     forwarded without going through Washington. All information 
     concerning attorney-client privilege was to be redacted with 
     Washington RTC determining the scope.
       Administration claim: No fundraising improprieties 
     occurred.
       Fact: On April 4, 1985, Jim McDougal hosted a fund-raiser 
     for Gov. Clinton. The Clinton's repeatedly asked McDougal to 
     host the fund-raiser to pay off the $50,000 personal loan 
     that Clinton had taken out the final weeks of his 1984 
     campaign.
       The question at issue is whether some of the money appears 
     to have been diverted from Madison Guaranty, which would 
     then, with the failure of Madison, imply deferred federal 
     financing of a gubernatorial election. For example, one 
     cashier's check for $3,000 was made in the name of Charles 
     Peacock III, then a 24-year-old college student who disclaims 
     any knowledge of having made a contribution. Mr. Peacock's 
     father was a major Madison borrower and served at one time on 
     Madison's board.
       Mr. Speaker, the president's former partner, Jim McDougal, 
     in a number of occasions has contested the assertion that no 
     resources were taken from Madison Guaranty and its related 
     entities and given to Whitewater. . . . Mr. McDougal gives 
     great credence to the circumstance that at some point Madison 
     Marketing may have been operating as an intended 
     proprietorship of his wife, but, whether this is true, this 
     appears to be a distinction without a difference, form over 
     substance.
       This view is in discordance with that of the United States 
     government. . . . It is also in discordance with a 
     contemporaneous view of the legal situation as defined and 
     described by Mr. McDougal in a July 1, 1986, memorandum from 
     him to Madison Guaranty's president, Mr. John Latham. . . .
       This evidentiary material coupled with the April 17, 1985, 
     minutes of Madison Financial's board authorizing a transfer 
     of $30,000 from Madison Financial to Whitewater, the memo of 
     L. Jean Lewis of the Kansas City RTC office showing over a 
     six-month period reviewed that approximately $70,000 was 
     transferred from Madison or affiliated entities to 
     Whitewater, plus other more confidential RTC material in our 
     possession indicates there is every credible reason to 
     believe that Madison Guaranty through affiliated entities did 
     transfer money to Whitewater.
       Furthermore, records filed with the Arkansas secretary of 
     state's office show that Mr. McDougal, as president of 
     Madison Financial Corp. [A subsidiary of Madison Guaranty] on 
     July 26, 1986, filed an application for registration of 
     fictitious name. The application was for Madison Financial to 
     do business as ``Madison Marketing''.
       The effect of this statement with its supporting 
     documentation is to evidence that:
       1. Whitewater may have begun as a legitimate real estate 
     venture, but it came to be used to skim, directly or 
     indirectly, federally insured deposits from an S&L and a 
     small business investment corporation. When each failed, the 
     U.S. taxpayer became obligated to pick up the tab.
       2. The family of the former governor of Arkansas received 
     value from Whitewater in excess of resources invested.
       3. Taxpayer-guaranteed funds were in all likelihood used to 
     benefit the campaign of a former governor.
       4. The independence of the U.S. government's regulatory 
     system has been flagrantly violated in an effort to protect a 
     single American citizen.
       5. Congress and the executive are employing closed-society 
     techniques to resist full disclosure of an embarrassing 
     circumstance, with unfortunate precedent setting 
     ramifications. . . .
       Whitewater is less about the issues of the day than it is 
     the ethics of our time. It is a central issue not because it 
     is big, but precisely because it is small.''
                                  ____


       Fresh Questions Making Whitewater an Affair Hard to Forget

                          (By R. W. Apple Jr.)

       Washington, March 24--Representative Jim Leach of Iowa 
     dropped his blockbuster this afternoon, but whether it will 
     inflict heavy political damage remains to be seen.
       For weeks and months, there have been allegations of 
     irregularities, even shulduggery, in an Arkansas real estate 
     deal involving Bill Clinton and his wife 15 years ago. But to 
     most Americans, it seemed like much ado about not very much, 
     and the whole thing took place long ago and far away, anyway.
       Suggestions earlier this month that those who were supposed 
     to be investigating the matter had improperly briefed people 
     in the White House several times brought the controversy into 
     the here and now--out of Arkansas and into Washington, out of 
     the 1970's and into the 1990's. Subpoenas were issued to 
     several top-level Presidential aides (two of them, George 
     Stephanopoulos and Bruce Lindsey, testified today), and 
     President Clinton conceded at the time that ``it would be 
     better if the meetings and conversations hadn't occurred.''
       But until Mr. Leach made his charges on the floor of the 
     House of Representatives today, and backed some of them with 
     detailed documents, no one with any credibility to speak of 
     had actually accused anyone in the Administration of trying 
     to interfere with the investigation or cover something up.
       Mr. Leach did that.
       He has a formidable reputation for independence and 
     rectitude matched by few people on Capitol Hill, and that 
     gave weight to what he said. But his charges remain unproven, 
     and Mr. Clinton categorically denied at his news conference 
     tonight any knowledge of the actions of which Mr. Leach 
     spoke. If anybody interfered, he implied, it was probably 
     Republican appointees.


                       fresh questions to answer

       The President also took several further steps tonight in 
     his campaign to demonstrate that he and Mrs. Clinton have 
     nothing to hide, pledging to release tax returns he had 
     previously kept confidential and conceding that his original 
     estimates of their losses on Whitewater might be wrong.
       Nevertheless, fresh questions permeate the political 
     atmosphere here: Which officials of the Resolution Trust 
     Corporation oversaw the investigation of the failure of 
     Madison Guaranty Savings and Loan and any potential 
     connection with the Whitewater land deal? Did they, as 
     charged, try to steer the inquiry away from Whitewater and 
     the Clintons? If so, who, if anyone--in the Treasury 
     Department? in the White House?--told them to do it? Who in 
     the White House, if anyone, learned of it after the fact? 
     What did they do then?
       The Iowa Republican has handed over his evidence to the 
     special counsel in the case, Robert B. Fiske, Jr., who will 
     have to try to figure out the answers. But politics dispenses 
     a rough justice of its own, and today was no exception.
       Mr. Clinton's standing in the polls which has been slipping 
     in the last few days, will almost certainly slip further now. 
     In the latest survey by the Los Angeles Times, two-thirds of 
     the respondents said they thought the Clintons were guilty of 
     some wrongdoing, and half said they thought the White House 
     had concealed damaging information--all before Mr. Leach 
     spoke.
       But the Times poll also showed that four of five Americans 
     think the White House affair is disrupting the Government's 
     effectiveness. The President and his advisers clearly think 
     that finding, at a time when the public seems to want action 
     by the Government, can be turned to Mr. Clinton's advantage.
       He scheduled tonight's prime-time news conference, only the 
     second of his Administration, to try to regain the offensive, 
     to turn people's minds back to health care, crime and other 
     issues, but Mr. Leach prevented that. The news conference was 
     about Whitewater, and the President looked beleaguered if 
     still a scrappy advocate of his own position as he defended 
     his and his wife's ethical sensitivity and commitment to 
     public service.
       ``Since we came here, our country has been moving in the 
     right direction,'' he said, rattling off a list of issues he 
     has driven to the top of the national agenda and bills he 
     predicted Congress would pass this year. ``I know that many 
     people around America must believe that Washington is 
     overwhelming preoccupied by the Whitewater matter. But our 
     Administration is preoccupied with the business we were sent 
     here to do for the American people.''
       He argued that Whitewater would ultimately matter little 
     ``in the light of history'' compared with ``the fact that by 
     common consensus we had the most productive first year of a 
     Presidency last year of anyone in a generation.''
       The White House strategy is to portray Mr. Clinton as the 
     high-minded statesman, concerned for the nation but harassed 
     by Republicans acting out of the basest of motives and by the 
     equally selfish, headline-hungry news media. Dee Dee Myers, 
     the White House press secretary, actually said on television 
     this afternoon that while others reveled in imagined scandal, 
     Mr. Clinton was doing his best ``to make sure that the world 
     is safe for democracy.''
       She and others close to the Clintons have been making the 
     argument for several weeks now that the people with whom the 
     Clintons associated before they came to Washington were being 
     pilloried because they came from Arkansas. Last weekend, for 
     example, a cabinet member told a reporter: ``You would never 
     pick on these people if they had grown up in Boston or 
     Washington and gone to Harvard or Yale. You all have a 
     contempt for the South and for Arkansas.''


                         APPREHENSIVE DEMOCRATS

       Much of the same populist tactic was employed in defense of 
     President Jimmy Carter when he came under fire. It failed to 
     stop his slide in the polls.
       The Easter Congressional recess, which begins this weekend 
     and runs through April 11, now looms large for Mr. Clinton. 
     While he takes a brief vacation in California and works on 
     his regular Joe image by attending University of Arkansas 
     basketball games, the denizens of Capitol Hill will be busy 
     taking soundings back home.
       Already, many are worried, especially Democrats, who are 
     fearful of heavy losses in November. Their apprehension is 
     pushing them ineluctably toward the hearings they have so 
     strongly opposed, lest their constituents consider them part 
     of a cover-up. Senator Bob Dole, the Republican leader, said 
     today that he expects hearings soon, probably by June, and 
     many Democrats are starting to argue that it would be better 
     to get them out of the way.
       The trouble with that approach is that few on the Hill even 
     pretend to know the truth about the charges. As Ted Van Dyk, 
     a longtime Democratic strategist, said this week, ``No 
     Congressional Democrat wants to dispute charges made against 
     the Clintons only to find the following day that they are 
     true or that new ones have surfaced.''
       Presumably acting on the advice of his new counsel, Lloyd 
     N. Cutler, Mr. Clinton moved quickly on Wednesday to demote 
     yet another aide who had become a symbol of ethical 
     slovenliness, William H. Kennedy 3d, a former member of Mrs. 
     Clinton's law firm who had been in charge of checking the 
     backgrounds of potential Federal nominees.
       In the face of Mr. Leach's charges, the President will have 
     to continue, as he did tonight, to answer questions on 
     Whitewater as they come, and to do everything possible to 
     assure the public that he is cooperating with the special 
     counsel. To do otherwise would revive talk of a bunker 
     mentality and tempt the Congressional Democrats to edge away 
     from Mr. Clinton in an effort to save their political skins.
       That is something the President can ill afford as he scours 
     for every vote in his bid to pass what he considers the 
     centerpiece of what he hopes will be the first of two terms.
                                  ____


             [From the Wall Street Journal, Mar. 14, 1994]

  Fiske Gets Off to Fast Start in Whitewater Probe By Moving Forward 
                       Aggressively on All Fronts

                        (By Ellen Joan Pollock)

       After only six weeks on the job, special counsel Robert 
     Fiske has launched aggressive probes on all fronts of the 
     tangled Whitewater controversy.
       His opening salvo was a stern warning to the White House, 
     Congress and Hillary Rodham Clinton's former law firm that he 
     won't tolerate anything that impedes his investigation. In a 
     show of prosecutorial muscle, Mr. Fiske came to Washington 
     last week from his Little Rock, Ark., headquarters to urge 
     lawmakers to delay hearings. He also questioned White House 
     aides before a grand jury to see if there were improper 
     contacts with Treasury officials about a criminal inquiry 
     into a failed thrift once owned by a Clinton business 
     partner.
       The fulcrum of the investigation will soon shift again to 
     Little Rock, where a small band of lawyers and FBI agents has 
     been poring over records of Madison Guaranty Savings & Loan 
     and preparing to question witnesses before a special grand 
     jury set to convene on March 23.
       So far, Mr. Fiske, a Republican, is getting good marks from 
     veterans of other investigations, including Iran-Contra 
     prosecutor Lawrence Walsh. But Thomas Puccio, who prosecuted 
     the Abscam corruption cases, says it was a waste of time to 
     subpoena White House officials to testify about how they 
     learned of the impending Madison investigation because the 
     Justice Department would have eventually told them about it 
     anyway.
       Mr. Fiske has a reputation for fierce independence and is 
     staying clear of the web of social and professional 
     connections that helped spawn the Whitewater controversy in 
     the first place.
       Shortly after his appointment in January, Mr. Fiske 
     received a friendly note from Little Rock lawyer Alston 
     Jennings Sr., who like Mr. Fiske is a former president of the 
     prestigious American College of Trial Lawyers. Mr. Jennings 
     represents Seth Ward, a former Madison consultant and father-
     in-law of Associate Attorney General Webster Hubbell. But 
     when Mr. Jennings followed up with a call, he got a polite 
     brushoff from Mr. Fiske. ``He obviously didn't want to be 
     seen anywhere with me,'' Mr. Jennings said.
       Mr. Fiske, a New York litigator on leave from the Wall 
     Street law firm of Davis, Polk & Wardwell, is pursuing a 
     number of different investigative threads at once.


                     The McDougals and the Clintons

       The heart of the Whitewater controversy centers on the 
     Clinton's business relationship with Arkansas businessman 
     James McDougal, who owned Madison, and his ex-wife, Susan. 
     The Clintons and McDouglas were partners in Whitewater 
     Development Co., a 230-acre real estate venture on Arkansas's 
     White River, in which President Clinton and the first lady 
     say they lost money. Unsorting the tangled business dealings 
     between the Clintons and the McDougals is one of the central 
     preoccupations of Mr. Fiske's squad of investigators in 
     Little Rock.
       Mr. McDougal, a highflying deal-maker with connections to 
     prominent members of Little Rock's business and political 
     communities, ran Madison as his own financial fiefdom. In 
     1985, Mr. Clinton asked him to host a fund-raiser to help 
     retire a $50,000 campaign loan. At the fund-raiser, which 
     then-Gov. Clinton didn't attend. Mr. McDougal raised $30,000. 
     But there is evidence that some of the money may not have 
     come from contributors but from Madison accounts.
       The Fiske staff hopes that documents involving Madison, a 
     Cherry Valley, Ark., bank that furnished the 1984 campaign 
     loan, and the Clinton campaign, will shed light on that flow 
     of money.
       Mr. Fiske is expected to investigate allegations that Mr. 
     McDougal ``carried'' the Clintons in the Whitewater venture, 
     launched with $203,000 in loans. There is evidence that the 
     McDougals shouldered more of the financial burden in the 
     investment than the Clintons even though the two couples had 
     an equal stake. Mr. Fiske will also question why Mr. McDougal 
     and President Clinton have conflicting accounts of their 
     investment. For example, the Clintons say they lost almost 
     $69,000 in Whitewater but Mr. McDougal says they lost only 
     about $9,000. The Clintons didn't claim any Whitewater loss 
     on their tax returns. Cash also inexplicably move between 
     Whitewater's account and other accounts at Madison, which 
     failed in 1989.
       The investigators already have voluminous documents 
     involving the McDougals' business interests. James Lyons, a 
     Denver lawyer who prepared a report on Whitewater for the 
     Clinton presidential campaign, has also turned over 
     documents.


                           madison's failure

       Mr. Fiske is trying to discover whether the Clintons 
     improperly used their influence to bolster Madison's sagging 
     fortunes. In 1985, Madison hired Mrs. Clinton and the Rose 
     Law Firm to help it get authorization for a stock offering. 
     The Arkansas securities department, which had to approve the 
     plan, was headed by Beverly Bassett Schaffer, a Clinton 
     appointee.
       Mr. Fiske recently subpoenaed the commission's records. 
     Mrs. Schaffer, a lawyer now in private practice, has turned 
     over her private calendars for that time, according to her 
     husband. Mr. Fiske has subpoenaed files from the Rose Law 
     Firm as well.
       Also on Mr. Fiske's agenda is an examination of the webb of 
     Mr. McDougal's failed business and real-estate interests. Mr. 
     McDougal had business relationships with many people 
     prominent in business and in politics, including current 
     Arkansas Gov. Jim Guy Tucker. Gov. Tucker received a grand 
     jury subpoena before Mr. Fiske was appointed special counsel. 
     Mr. McDougal has complained that allegations of mismanagement 
     at his S&L are being recycled from a 1990 federal fraud trial 
     in which he was acquitted.


                           the rose law firm

       The Rose firm meanwhile, has become tangled in the 
     Whitewater controversy on several levels. Mr. Fiske is 
     expected to examine whether the firm had conflicts of 
     interest when it represented the Resolution Trust Corp., 
     after it took over Madison, in litigation against the 
     thrift's auditor. A grand jury has subpoenaed documents 
     involving Seth Ward, Mr. Hubbell's father-in-law, who sued 
     Madison for commissions stemming from real-estate 
     transactions.
       Ronald Clark. Rose managing partner, says the firm is 
     cooperating fully with Mr. Fiske. Several rooms at the firm 
     are devoted to culling documents to ensure that client 
     confidences are not divulged as documents are turned over. 
     Mr. Clark also insists that any documents that may have been 
     shredded have nothing to do with Mr. Fiske's inquiry.


                               david hale

       Later this month, Mr. Fiske will prosecute David Hale on 
     charges of defrauding the Small Business Administration, 
     which had licensed him to grant loans through his Capital 
     Management Services. On the face of it, this case has nothing 
     to do with Whitewater. But Mr. Hale, a former municipal 
     judge, has alleged that Mr. Clinton, when he was governor, 
     pressured him into making a $300,000 loan to a firm owned by 
     Mr. McDougal's wife, Susan. Some of that loan was allegedly 
     diverted to Whitewater.
       When Mr. Fiske replaced other federal prosecutors in the 
     Hale case last month. Mr. Hale's co-defendants objected 
     strenuously because they didn't want to be pulled into the 
     Whitewater controversy. But Mr. Fiske's lawyers prevailed. 
     The trial is set for March 28.


                      The Death of Vincent Foster

       Mr. Fiske has assigned a deputy, Roderick Lankler, to take 
     charge of the most sensitive corner of his investigation, a 
     full-scale probe of the death of Vincent Foster.
       The goal is to solve the mystery of why Mr. Foster killed 
     himself and whether the Whitewater controversy contributed to 
     his despondent mood. Even if a definitive answer can't be 
     found, investigators hope to quash some of the zanier 
     conspiracy theories. They don't believe speculation, rampant 
     in the tabloid press, that Mr. Foster was murdered. Forensic 
     experts and pathologists will examine documents already 
     turned over by the U.S. Park Service, which investigated Mr. 
     Foster's death, and Mr. Lankler is considering retaining a 
     psychiatrist to evaluate Mr. Foster's mood before he died.
       Under the supervision of Mr. Lankler, who once prosecuted 
     homicide cases in the Manhattan District Attorney's office, 
     investigators are also looking into allegations that White 
     House officials may have impeded the park-police 
     investigation. In the aftermath of the suicide, a file 
     containing Whitewater documents was found in Mr. Foster's 
     office and turned over by White House counsel Bernard 
     Nussbaum to the Clintons' personal lawyer. The file has not 
     been turned over to Mr. Fiske. According to White House 
     accounts, Mr. Foster had the Whitewater file in his office 
     because he was preparing delinquent tax returns for the 
     partnership.

                          ____________________