Whitewater

THE TERM Whitewater has two meanings. In its literal sense, it refers to the Whitewater Development Corporation, an unsuccessful real estate partnership between former president and first lady Bill and Hillary Clinton and James and Linda McDougal to develop a resort on the White River in Arkansas. In its broader sense, Whitewater was a partisan attempt to use a “scandal” to bring down a president.

The real estate deal can only be understood in the deregulation environment of the 1980s in what became known as the “me decade.” The “scandal” makes sense only in the highly charged environment of political campaigns and subsequent partisan attacks on a political opponent. Within the context of Whitewater, neither Bill nor Hillary Clinton was ever found guilty of anything worse than misjudgment. The investigations never proved that Arkansas Governor Clinton (at the time of the Whitewater transactions) used his position to help the McDougals. Nor did it prove that either of the Clintons engaged in a cover-up. Clinton opponents maintain that the Clintons lied, and even some Clinton supporters believe that both Clintons should have been more forthcoming on details of Whitewater.

James and Susan McDougal, who allegedly illegally diverted over $17 million from Madison Guaranty funds, were convicted on charges of conspiracy and mail fraud. James McDougal died in prison in 1998. Susan McDougal was also charged with contempt because she would not provide requested information on the Clintons. Arkansas Governor Guy Tucker was also convicted of conspiracy and fraud.

In an unsecured loan, the Union National Bank of Arkansas provided the Clintons $20,000 to invest in the deal to turn 230 acres of undeveloped land into a resort. The Citizen's Bank and Trust of Arkansas financed an additional $182,000 for the Whitewater Development Corporation to buy the land, which the president of the bank owned. Even though the McDougals put up most the money involved, the Clintons were considered equal partners.

In the early 1990s, investigations began into various failed savings and loan institutions (S&Ls), which had cost the taxpayers millions of dollars. Charged with investigating the S&L scandals, the Resolution Trust Corporation examined Madison Guaranty Savings and Loan in Arkansas, which had collapsed in 1989 and which was owned by James and Susan McDougal. Even after filing for bankruptcy, Madison Guaranty continued to make payments to the Whitewater account. Initially, the Clintons were seen as witnesses against the McDougals; but as details about the partnership were made public, the media and Clinton critics called[Page 862] for hearings into the Clinton's finances. Matters were complicated by the fact that Hillary Clinton had served as the lawyer for Madison Guaranty Savings and Loan, and more complications arose when Vince Foster, White House counsel and guardian of the Clinton's personal financial papers, committed suicide in July 1993 under mysterious circumstances.

After both the Senate and House Banking Committees held hearings on Whitewater, Kenneth Starr, a staunch Republican, was appointed as independent counsel to investigate the Clinton connection to Whitewater. Starr extended his investigation to include information about Bill Clinton's sexual activities. Ultimately, the House of Representatives impeached the president on charges that arose from Starr's investigation.

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