Newspaper article St Louis Post-Dispatch (MO)

The Way of Doing Things in Arkansas and Missouri

Newspaper article St Louis Post-Dispatch (MO)

The Way of Doing Things in Arkansas and Missouri

Article excerpt

HILLARY RODHAM CLINTON'S testimony Friday before a federal grand jury marks the latest and highest-profile attempt by investigators to get to the bottom of the relationship between lawyers, politicians and savings and loan operators in Arkansas during the mid-1980s.

She is the lawyer in question, and her husband, then-Gov. Bill Clinton, the politician. The money man was James McDougal, who ran Madison Guaranty Savings & Loan before it folded, leaving taxpayers to pick up the tab. He's now under indictment, charged with fraud.

The problem that investigators - and ultimately the public - have is figuring out to what extent, if at all, the Clintons' association with McDougal crossed ethical or legal lines in a state where, as one Senate witness put it, "everybody knows everybody else."

That witness was Beverly Bassett Schaffer, the former chief S&L regulator in Arkansas who testified Thursday before the Senate committee on Whitewater. She was appointed by Gov. Clinton, who was apparently urged to name her by McDougal - although she says she did not know McDougal and would not have wanted his recommendation.

McDougal also hired Hillary Clinton and her law firm to represent Madison, and records show that she did some work related to at least one of the questionable ventures that drained the savings and loan.

Federal regulators cracked down on Madison in 1986. In July of that year, they told Schaffer they planned to remove McDougal, and Schaffer notified an aide to Clinton. She said she knew McDougal and the Clintons were associates but did not know they were business partners in the Whitewater land venture.

Schaffer and Democrats on the committee said there wasn't anything wrong with her notifying the governor, but Republicans like Sen. Christopher Bond of Missouri thought otherwise.

Bond said he had called Mickey Brown, Missouri's chief S&L regulator when Bond was governor, to ask his opinion.

"He said . . . nobody else would know when they took down a big savings and loan in Missouri," Bond said. "And I asked him, `Why not?'

"He said, `Well, because if anybody found out they were going to take down a savings and loan, somebody could be juggling around, doctoring the books, or mickey-mousing. …

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