Essay — From the November 2014 issue

Stop Hillary!

Vote no to a Clinton dynasty

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And then there were the scandals, many of them Hillary’s. The most famous was Whitewater, a word it pains me to type. Democrats love to say that there was nothing to that scandal. While it was certainly not the diabolical conspiracy Republicans made it out to be during the fevered days of the Clinton impeachment, it was not nothing. In short: A sleazy and well-connected pal of the Clintons, Jim McDougal, came to them in 1978 with a proposal to invest in a piece of undeveloped riverfront land in the Ozark Mountains that he hoped to turn into vacation homes. They took the bait — and paid almost no attention afterward, which turned out to be a mistake.

What happened was that McDougal then bought himself a savings and loan association, which he renamed Madison Guaranty and used to fund his real estate ventures, Whitewater among them. Speculators operating on borrowed money are always dangerous — doubly so when they’ve got their own bank to draw on. And Madison Guaranty, like hundreds of other S&Ls in the early 1980s, was bleeding money. By 1985, a desperate McDougal hired Rose to handle the bank’s legal affairs. That was malodorous in itself, since Madison was regulated by the state and a Rose partner was the governor’s wife. But the Clintons, of course, were also investors in McDougal’s schemes. The fact that they appear to have lost money on Whitewater, and were never convicted of any criminal behavior in connection with the scandal, hardly excuses this farcical round-robin of ethical conflicts.4

4 Their escape from the Whitewater morass is all the more striking when you consider what happened to the other participants. Jim McDougal was convicted of eighteen counts of felony fraud and conspiracy in connection with rotten Madison Guaranty loans; his wife, Susan McDougal, served eighteen months in prison for refusing to testify about the scandal, before receiving a presidential pardon from Bill; and even Bill’s successor as Arkansas governor, Jim Guy Tucker, was sentenced to four years on Whitewater-related conspiracy and mail-fraud charges.

Yet Whitewater itself is of far less interest than how Hillary handled it: with lies, half-truths, and secrecy. She initially claimed during the 1992 campaign that she hadn’t represented clients before state regulators. She then backpedaled and said that she had “tried to avoid such involvement and cannot recall any instance other than the Madison Guaranty matter in which I had any involvement, and my involvement there was minimal.” In fact, Madison wasn’t the only instance. Another was the Southern Development Bancorporation, which paid Rose more than $100,000 in fees and received $300,000 in state investments.

5 Longtime readers of this magazine may recall “Fool for Scandal,” a 1994 report in which Gene Lyons demolished much of the accepted wisdom about what he called the “Great Whitewater Political Scandal and Multimedia Extravaganza.” Lyons makes a convincing case that Bill did not lean on the Arkansas Securities Commission to treat his friend and business partner with kid gloves. But in discussing Hillary’s legal representation of McDougal’s enterprise, even Lyons grows uneasy: “For Hillary Rodham Clinton to have ventured anywhere near Madison in any capacity was a damn fool thing to do.” 

Hillary also claimed the Rose billing records for the Madison case, which were under multiple subpoenas, had disappeared. Then they suddenly reappeared, discovered by a personal assistant in a room in the residential quarters of the White House. When asked about this mysterious turn of events, Hillary responded as if she, too, were an injured party: “I, like everyone else, would like to know the answer about how those documents showed up after all these years.” The records showed that far from having a trivial role in representing Madison, she had actually billed for sixty hours of work.5

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is the editor and publisher of the Left Business Observer and the author most recently of After the New Economy (The New Press).

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