Monica Lewinsky has again taken center stage in the U.S. media going public about the affair that fueled the House of Representatives impeachment of Bill Clinton in 1999. In the much-anticipated June Vanity Fair, Monica Lewinsky penned the essay Shame and Survival to reclaim the events that transpired during her days as a White House intern. Political strategists have speculated that the essay was prompted by Clinton supporters in an effort to control the scandal from reemerging during Hillary Clinton’s presidential campaign.
The Lewinsky affair was the culmination of a six-year Independent Counsel investigation into an impressive array of scandals involving Hillary and Bill Clinton. Those scandals, which included bank fraud, campaign finance fraud, regulatory interference, bribery and obstruction of justice, were all but forgotten in the media frenzy surrounding Bill Clinton’s sexscapades. By putting the Lewinsky affair to bed, the multitude of scandals canonized as Whitewater is also being laid to rest as the product of a frivolous bipartisan witch-hunt. Should they be?
In 1989, Madison Guaranty Savings & Loan in Little Rock, AK joined the chorus of thrifts that collapsed due to corruption, fraud and greed in what became known as the Savings & Loan debacle. Madison Guaranty had been under investigation by bank regulators since 1984 for suspicious lending practices, speculative land deals and exorbitant commissions paid to controlling partners—by the time it closed, the thrift had cost taxpayers $73 million. James McDougal, owner of the thrift, and his wife Susan were intimately acquainted with the Clintons. They were the Clintons’ friends, business partners, political supporters and campaign fundraisers. The relationship that helped finance Bill Clinton’s political career would haunt him for the duration of his time in the White House.
In 1978, James and Susan McDougal formed the Whitewater Development Corporation with Bill and Hillary Clinton to build vacation homes in the Ozark Mountains—four years later McDougal purchased Madison Guaranty. During Hillary Clinton’s tenure at the Rose Law Firm in Little Rock, she preformed legal work for Madison Guaranty that helped stave off bank regulators. In 1992, the Resolution Trust Corp., charged with the clean up of the collapsed Savings & Loan industry, named the Clintons as possible benefactors of illegal activity at Madison Guaranty in a criminal referral sent to the Justice Department. The investigations that followed included a House Banking Committee investigation, a Special Senate Whitewater Committee investigation and two Independent Counsel investigations, which resulted in a series of high-profile resignations in the Executive Branch and netted the conviction of 12 defendants including the former Governor of Arkansas Jim Guy Tucker and the former Associate Attorney General and Rose Law Firm partner Webster Hubbell. The Clintons, however, escaped criminal charges on all aspects of the investigations, except for Bill Clinton on perjury charges related to Monica Lewinsky.
The heart of the scandal
The Whitewater investigations incorporated a host of suspicious activity that ranged from the Clintons time in AK to their activity in the Oval Office. The large scope of the Whitewater investigations obfuscated the original RTC criminal referral that brought the Whitewater affair to light. In the myriad of alleged wrongdoing, the Clintons involvement with a troubled thrift that contributed to the collapse of the Savings & Loan industry shifted to the back burner. The following are highlights from the scandal that started the scandals:
- Bill Clinton was allegedly the recipient of several Madison Guaranty loans that helped finance his gubernatorial campaigns in the early 1980s. In 1985, McDougal held a fundraising event to help Bill Clinton pay off his campaign debts. Bank regulators later determined that money was improperly withdrawn from depositors’ accounts.
- In 1985, Rose Law Firm was hired to do legal work for Madison Guaranty, which had attracted the attention of bank regulators the previous year. Hillary Clinton drafted a recapitalization plan for Madison Guaranty that was approved by bank regulators and helped ensure the thrifts continued operation. Billing records detailing Rose Law Firm’s relationship with Madison Guaranty were withheld from Whitewater investigators for four years.
- Capital Management Services, a business investment corporation owned by David Hale that defrauded the Small Business Administration of $3.4 million, engaged in fraudulent lending activity with Madison Guaranty. In 1986, a $300,000 loan from CMS was partially diverted by Madison Guaranty to the Whitewater Development Corp.
- Hillary Clinton’s legal work for James McDougal and Madison Guaranty in 1986 included closing a fraudulent land deal known as Castle Grande.
- In 1993, Clinton aides held several meetings with Treasury Department officials about the RTC’s investigation of Madison Guaranty. Investigators later determined at least 40 meetings were held.
- One month after filing years worth of delinquent taxes for the Whitewater Development Corp. in 1993 former Rose Law Firm partner and Deputy White House Counsel Vincent Foster was found dead. His death was ruled a suicide. White house aides entered his office before federal investigators were given access.
A cause for concern
The Whitewater investigations will be publicly remembered as a political fiasco charged by the partisan interests of the accusers and investigators—a public image solidified by the persecution of Bill Clinton over his affair with Monica Lewinsky. The investigations conducted by the RTC, Congress and the Independent Counsel failed to find criminalities in the Clintons relationship with Madison Guaranty. The Clintons were, after all, just one of a number of Republican and Democratic politicians that had questionable financial entanglements with corrupt Savings & Loan institutions and had interfered with regulators on their behalf. Political interference with regulators was a primary factor in transforming the Savings & Loan debacle of the late 1980s and early 1990s into a financial calamity that cost taxpayers $300 billion. It is a scandal that America cannot afford to forget. Unfortunately, in the case of Whitewater, it is a scandal that will never be properly remembered.