by JEFFREY ST. CLAIR & ALEXANDER COCKBURN
In the spring of 1996, Hillary Clinton faced a situation unique in American history: the possible criminal indictment of a president’s wife. For two years a federal grand jury had been sitting in Little Rock, Arkansas, reviewing the Clintons’ financial dealings from 1978 through 1992. The episodes submitted to their scrutiny by independent counsel Kenneth Starr included the Clintons’ involvement in the Whitewater Development Corp.; HRC’s legal representation of James McDougal’s failing Madison Guaranty Savings & Loan; Madison’s possible financing of Clinton campaigns; HRC’s role in illegal real estate transactions in the Castle Grande development; the Clintons’ fraudulent financial statements submitted in loan applications in the 1980s; and more generally, the political cronyism and favoritism the Clintons took part in during their sojourn in the governor’s mansion in Little Rock.
Meanwhile, a separate federal grand jury in Washington, D.C. listened to Starr’s presentation of other episodes, including: “Travelgate”; the removal of Whitewater documents from Vince Foster’s office; and the reappearance of HRC’s billing records involving her work on the Castle Grande project while at the Rose law firm. HRC had previously testified under oath in a federal investigation by the Resolution Trust Corporation that she had nothing to do with Castle Grande.
Pending the explosive impact of an actual indictment, the public view of Whitewater and related matters seems to derive from the consensus of the press outside of committed foes of the Clinton administration such as the Wall Street Journal editorial page. In this view, Whitewater constitutes “a cover-up without a crime.” Hitched to this comfortable sentiment is the proposition that whatever the Clintons’ past peccadilloes, they occurred in the alien subculture of Arkansas, before Bill and Hillary stepped onto the stage of national history.
The most thorough survey of the Clintons’ dealings undertaken by a journalist–James B. Stewart’s Blood Sport: The President and His Adversaries–has elicited precisely this reaction. Discussing Stewart’s 500-page book, Maureen Dowd concluded in her New York Times column that there was nothing new, no smoking gun.
But armed with the details furnished by Stewart and the 1,000-page Pillsbury, Madison & Sutro report on Whitewater to the RTC, submitted on December 28, 1995, it is possible to lay out a simple narrative that’s devastating to the Clintons.
“Whitewater” represents a pervasive character trait of the Clintons: the exchange of money for political favors. It also represents a trait that caused an uproar when William Safire drew attention to it in 1995: namely, HRC’s untrammeled propensity to tell lies.
Whitewater began with a frantic appeal from the Clintons to their friend McDougal for money at a time when Bill Clinton was running for governor in 1978. McDougal duly located the Whitewater property outside the town of Flippen in the Ozarks and got the investment off the ground. Payback for McDougal was not long postponed. Elected governor three months later, Clinton appointed McDougal chief financial advisor in the new administration.
With even greater speed the Clintons and the McDougals reneged on commitments to make a 10 percent cash payment to a Flippen bank against 90 percent financing of their Whitewater purchase. Then they got another below-market-rate loan from a Little Rock bank, again in exchange of a marker against political favors. All these transactions breached Arkansas law, represented insider dealings beyond the reach of ordinary mortals, and constituted one more straw on the caving spine of the Savings & Loan industry. Frank Burge, a loan officer at the Citizens Bank and Trust Co. of Flippen, later told Stewart that when he presented the McDougal/Clinton deal to his board, he made the assumption–accepted by all present–that the plan was to have wealthy backers of Clinton “buy the lots at highly inflated prices as a clandestine means of funneling money into the governor’s pocket, thereby gaining influence.”
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