Whitewater Controversy: Explained for People Who Don’t Remember the Clinton Presidency!
You have to know a little bit about the Whitewater issue to appreciate why the Clintons are seen as secretive schemers on the right and as victims of vicious witch hunts on the left.
According to John Harris’ The Survivor: Bill Clinton in the White House, “Whitewater became shorthand for cronyism, cover-up, and excess of the financial, political, and even sexual variety” among Clinton’s critics. Whitewater “became synonymous with bogus accusations, partisan vendettas, and prosecutorial abuse” according to Clinton supporters.
In 1978, while Bill was Arkansas’ attorney general, the story begins (and would be elected governor, at age 32, that November). For the purpose of supplementing Bill’s government pay and Hillary’s earnings as an attorney at the Rose Law Firm, the couple began looking into investment alternatives.
According to Hillary, “politics is a fundamentally shaky career,” and therefore they “ought to establish a nest egg” in her 2003 memoir, Living History. “I had never really given savings or investing any thought until I realized that it would be primarily my duty if our growing family was going to have any financial buffer.”
These initiatives had some measure of success. After being advised to invest in cattle futures by her friend and seasoned commodities trader Jim Blair, Hillary put away $1,000 and watched it increase to nearly $100,000 in a little over a year.
Throughout Bill’s administration, the such gain was the subject of extensive examination; one study found that the odds of a return so enormous during the relevant period was around one in 31 trillion, even under the most liberal assumptions.
A suspicion that Hillary obtained preferential treatment because Bill held a political position was heightened when she was able to acquire 10 cattle contracts (usually worth $12,000) with only $1,000 in her trading account. Subsequently, the White House conducted an investigation into the trades and found no evidence that Hillary had broken any rules.
However, not all investments were successful, and this is at the heart of the Whitewater affair. In 1978, Bill and Hillary along with James and Susan McDougal established the Whitewater Development Corporation to purchase 230 riverside acres for subdivision into vacation home lots.
The Clintons were able to get into a lucrative real estate deal with no initial investment thanks to Jim McDougal, a real estate mogul and longtime friend of Bill’s. The Clintons and the McDougals co-signed a $180,000 loan to cover the cost of the land, and McDougal took out an additional loan of $203,000 to cover the down payment and closing costs.
The Whitewater Effort Was Unsuccessful
The Whitewater effort was unsuccessful. The area was inaccessible due to the regular big storms that flooded the river, making the place undesirable. Also, borrowing rates were skyrocketing during the stagflation of the late 1970s and early 1980s, making second houses expensive for many families.
It is not illegal to put money into a questionable real estate transaction. Nonetheless, what Jim McDougal did after the initial agreement was.
After purchasing a failing local savings and loan association and rebranding it as Madison Guaranty, he bilked the institution and a small business investment firm out of a total of $3 million. The failure of the bank cost the federal government roughly $73 million. It is still unclear and convoluted how this links to the Whitewater investment, if at all. The Clintons’ detractors, though, said the couple was complicit in Madison’s illegal activities.
Former Capital Management Services president David Hale has accused the Clintons of being involved in a plot. According to Hale, Clinton put undue pressure on him to make a bogus $300,000 loan to Susan McDougal, which Hale claimed had been used in part to prop up Whitewater.
There were also rumors that McDougal used Madison’s money to settle Bill’s gubernatorial campaign debts in 1985 and that Bill had chosen a buddy of McDougal’s to the state bank regulator position as a shield for McDougal. After his conviction for fraud, McDougal turned on the Clintons, accusing them of being complicit in his schemes.
Real Malfeasance Was Found by The Investigations Into Whitewater
Real malfeasance was found by the investigations into Whitewater. Overall, fifteen people were found guilty of various accusations. Both the McDougals and Clinton’s successor as governor of Arkansas, Jim Guy Tucker, were found guilty of fraud. Former Clinton Justice Department attorney and Hillary Clinton law partner Webster Hubbell has admitted to fraud.
Despite numerous investigations, including the most well-known one led by independent counsel Kenneth Starr, the Clintons were determined to have committed no illegal acts in connection with the Whitewater affair. Based on the evidence, it was determined that the suspects were more likely to be innocent bystanders to Jim McDougal’s wrongdoing than active participants in the scheme.
For Clinton supporters, Whitewater is shorthand for the many scandals that were manufactured by the president’s political opponents in an attempt to bring him down.
These include Filegate, Travelgate, and the suicide of White House deputy counsel and peripheral Whitewater figure Vince Foster (which conspiracy theorists pegged as a murder).
Finally, Starr, who had been brought in to look into Whitewater, sought to impeach Clinton for reasons unconnected to that scandal. Whitewater, on the other hand, proves to the Clintons’ adversaries that the pair is part of a corrupt political culture in Arkansas and is willing to break the law to benefit themselves and their allies.