Hillary Clinton & Madison Guaranty S&L Scandal

While 2008 Democratic presidential candidate Hillary Clinton’s husband was Arkansas’s governor in the 1980s, the Clintons’ Whitewater Development Corporation business partner, James McDougal, owned the Madison Guaranty Savings and Loan bank in Arkansas. Yet, as the New York Times (1/6/96) recalled, “in response to a question about whether she had worked on Madison matters before state regulators appointed by her husband,” former Rose Law firm partner Hillary Clinton said in an April 23, 1994 press conference that “it was not an area that I practiced in, it was not an area that I really know anything, to speak of, about.” But according to the Times:

“The records show Mrs. Clinton billed for a wide range of legal services on behalf of Madison…They show that on April 29, 1985, the day before the Rose firm submitted a request for the state security commissioner to approve a financing plan for Madison, Mrs. Clinton had two telephone conferences totaling one hour. One was with the state securities commissioner who had been appointed three months earlier by then-Governor Clinton.”

In his book The Great Whitewater Fiasco, Martin Gross stated the following about Hillary’s apparent role in Arkansas’s Madison Guaranty S&L scandal:

“Almost immediately after his inauguration in January 1985, Governor Clinton replaced his Securities Department chief Lee Thalheimer…with a friend, Beverly Bassett. Ms. Bassett came from a law firm that has worked for Madison Guaranty. She was also the sister of Clinton’s campaign chief in Washington County…An assistant of Hillary’s…wrote Ms. Bassett at least two letters on behalf of Madison Guaranty…Clinton’s own banking chief had warned that Madison was making bad loans…Madison needed more capital to keep going. It also had to get the Arkansas Securities Department to be cooperative…Ms. Bassett quickly approved the plan…The great fiction of the whole operation was that Hillary was not involved…Nonsense.”
(Downtown 1/24/96)

Former Arkansas governor Bill Clinton’s liaison to banking and industrial development and Whitewater Development business partner, the now-deceased James McDougal, was convicted during the first Clinton Administration in the 1990s of 18 felony counts of fraud and other crimes in connection with the Arkansas operations of the Madison Guaranty S&L, whose special interests 2008 Democratic presidential candidate Hillary Clinton apparently represented while her husband was governor.

According to Clinton Confidential: The Climb To Power by George Carpozi, Jr., in early 1986, “McDougal had asked [Dave] Hale for a $150,000 advance from Small Business Loan Administration funds,” although “the loan” was “perfectly illegal since McDougal was Big Business;” and on Feb. 28, 1986, outside the Arkansas statehouse, Hillary’s husband, the then-governor of Arkansas, nudged Hale “with a wink” and said “Whadd ya say, Dave o’pal, you’re a-gonna he’p out Jim McDougal, aren’t y’all?”

The same book also asserted that “not many days following” this Feb. 28, 1986 encounter, Hillary Clinton’s husband was in McDougal’s office when Hale was told the $150,000 loan was needed to help fund Bill Clinton’s 1986 re-election campaign. The Clintons’ convicted business partner also held a “fund-raiser at his Madison bank office in Little Rock” in Jan. 1985 to help “pay off [Bill] Clinton’s political debts, including unsecured personal loans from the Bank of Cherry Valley,” (which was owned by Bill Clinton aide Maurice Smith) which Hillary’s husband attended, according to First In His Class: A Biography of Bill Clinton by David Maraniss.

Ironically, in their 1992 campaign book Putting People First: How We Can All Change America, Hillary’s husband and 2000 Democratic presidential candidate Al Gore charged that “Washington stood by while quick-buck artists brought down the savings-and-loan industry, leaving the rest of us with a $500 billion bill.” (Downtown/Aquarian Weekly 6/12/96)

Next: Grit TV Host and Blue Grit Author Laura Flanders: A 1991 Downtown Interview—Part 2