[Congressional Record Volume 140, Number 107 (Friday, August 5, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: August 5, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
          QUESTIONS OF ETHICS REGARD- ING WHITE HOUSE COUNSEL

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Louisiana [Mr. Livingston] is recognized for 5 minutes.
  Mr. LIVINGSTON. Mr. Speaker, I think it is interesting that a little 
while ago this House passed National Character Education Week, and then 
I look at the article in the Wall Street Journal today. Down at the 
lower right-hand side of the op ed page, the editorial page, I note 
that Lloyd Cutler, Special Counsel to the President, testified before 
the House Committee on Banking, Finance and Urban Affairs on July 26, 
1994, taking great umbrage at some of the questions posed to him. He 
said, ``We have not redacted,'' or deleted, ``anything relevant to the 
committee's inquiries.''
  I would like to add that as a lawyer who has been in the business of 
producing documents to other lawyers for a good 50 years, this is the 
first time that any other lawyer has ever questioned whether the 
production of redacted or deleted documents under my supervision has 
been unethical. I am not going to say that anything Mr. Cutler did is 
unethical, but I made a 1-minute today, took out a 1-minute speech, in 
which I suggested that Mr. Cutler ought to consider that he took 
umbrage on July 26 about the questions asked to him, and then 3 days 
later, July 29, 1994, in conjunction with Senate inquiries and Senator 
D'Amato and Senator Riegel, on their inquiry, he produces a list of 
documents in which language clearly pertained to the Whitewater 
investigations, which he should not have deleted in the House 
investigation, yet he did.

                              {time}  1510

  In the Senate investigations, Riegle and D'Amato said:
  ``Mr. Cutler has today at the Committee's request released the full 
contents of a March 1 memorandum previously provided to the Committee 
in redacted form, or deleted form.''
  Then he proceeds to produce at least some 36, 37 pages, one including 
a memorandum which was confidential to the First Lady from Harold 
Ickes, adviser to the White House, on March 1, 1994, regarding 
Resolution Trust.
  That memorandum was not deleted in totality, but this paragraph was:
  ``Attached is a copy of W. Neil Eggleston's February 28, 1994 
memorandum to me, Harold Ickes, regarding certain issues involving the 
RTC and the Rose Law Firm, known as Rose, in Little Rock, Arkansas.''
  That provision was deleted. Then another little sentence was deleted 
from that memorandum and I will not read the whole memorandum for lack 
of time:
  ``Please let me know if you want to discuss the attached.''
  That was from Harold Ickes to the First Lady. That was deleted 
presumably under the supervision of Mr. Lloyd Cutler, special counsel 
to the President.
  Now, this memorandum was deleted in its entirety, produced only 3 
days after Lloyd Cutler gets so huffy about people questioning whether 
or not he is producing all the material. This memorandum says in 
effect, it is a memorandum for Harold Ickes, Deputy Chief of Staff, 
from W. Neil Eggleston, Associate Counsel to the President, re 
Whitewater--FDIC and RTC Rose Law Firm Issues:
  ``The recent release of the FDIC and RTC reports addressing the 
possible conflict of the Rose Law Firm in its representations of 
Madison Guaranty raises a number of issues.'' All deleted.
  ``On the factual issue of whether Rose Law Firm had disclosed to the 
FDIC its prior representation of Madison Guaranty, the FDIC concluded 
that the record was unclear. On the issue of whether Mr. Hubbell''--
Webster Hubbell of the White House who is no longer there at the White 
House--``had disclosed his relationship with his father-in-law, Seth 
Ward, who was then in litigation with Madison Guaranty, the FDIC stated 
that it was uncertain whether Mr. Hubbell had disclosed that 
relationship.'' In other words, might have hidden it. ``Nevertheless, 
the relationship was plainly known to the FDIC within 3 months of 
retention.'' All of that was deleted.
  ``As noted above, it is not clear whether the FDIC or the RTC will 
review this matter under an actual conflict standard or under an 
appearance of conflict standard.'' This was deleted and withheld from 
the House Committee on Banking, Finance and Urban Affairs.
  ``The most severe sanction that would likely flow from a finding that 
the Rose Law Firm had a duty to disclose its prior representation of 
Madison Guaranty and its relationship with Mr. Ward and that it 
breached that duty would be that the Rose Law Firm would be permanently 
barred from any further work for the RTC or the FDIC.'' That was all 
deleted, all withheld from the Committee on Banking, Finance and Urban 
Affairs.
  ``Under the facts as we are now understand them, it would seem quite 
unlikely that the RTC could bring a civil action against the Rose firm 
or any of its attorneys for failing to disclose the conflict. Criminal 
liability for the Rose Law Firm would seem even more remote. The RTC is 
investigating whether or not it has a civil tort action against anyone 
who caused a loss to Madison Guaranty. This would include insiders such 
as James and Susan McDougal and members of the board of Madison. It 
also includes professionals who provided service to Madison Guaranty, 
such as the Rose Law Firm, other law firms, and accounting firms. The 
Frost & Company suit is an example of a suit against a professional 
service provider that caused loss to Madison Guaranty through a 
negligent audit. The RTC could also sue outsiders, including the 
President and Mrs. Clinton, if the RTC found that outsiders worked with 
insiders illegally to divert assets of the savings and loan. For 
example, if the RTC believed that the Clinton campaign knowingly 
received diverted Madison assets at the April 1985 fundraiser or that 
the Clintons knowingly received other diverted Madison Guaranty assets 
through Whitewater, it could bring suit. The RTC commonly sues the 
recipient of a loan where it has information that the borrower knew 
that the loan was improper. Now that Mr. Altman as acting CEO of the 
RTC has recused himself from further involvement in Madison Guaranty 
matters, who at the RTC will be the decisionmaker on whether to bring a 
civil action arising out of the failure of Madison Guaranty?''
  Then they go on and speculate as to who might take the place of Roger 
Altman who as head of the RTC was supposed to recuse himself and did 
not.
  This entire memorandum was deleted, was redacted by Lloyd Cutler, the 
special counsel to the President of the United States, and then in 
front of the Members of the House Committee on Banking, Finance and 
Urban Affairs he gets insulted and indignant when they ask him whether 
or not he has produced all material relevant to the investigation of 
diverted assets to the Madison Guaranty Savings and Loan.
  Mr. Speaker, Lloyd Cutler owes the House of Representatives an 
explanation and an apology, because to get indignant with Members of 
the House who are carrying out their legally endowed responsibilities 
under severe restrictions imposed upon them by the chairman of the 
Committee on Banking, Finance and Urban Affairs, under the 5-minute 
rule, allowing them very little time to ask questions and yet they ask 
a single simple question and do not get the truth from the special 
counsel to the President of the United States, something is terribly 
wrong.
  Mr. Cutler owes the United States of America an apology and perhaps 
he should resign.

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