TIME: Almanac 1995

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<text id=94TT1114> <title> Aug. 08, 1994: Whitewater:Roger, Over and Out? </title> <history> TIME--The Weekly Newsmagazine--1994 Aug. 08, 1994 Everybody's Hip (And That's Not Cool) </history> <article> <source>Time Magazine</source> <hdr> WHITEWATER, Page 22 Roger, Over and Out? </hdr> <body> Senators think the No. 2 Treasury officer leaked secrets to the White House, then misled them. It may cost him his job. By Michael Duffy/Washington--With reporting by James Carney and Suneel Ratan/Washington, Michael Kramer/New York Roger Altman probably knew his days were numbered when Bill Clinton issued a tepid, one-sentence endorsement of his college chum and campaign fund raiser. In a statement released by Treasury chief Lloyd Bentsen last Monday, Clinton said, "I believe that Roger Altman has been an excellent Deputy Treasury Secretary, and we want him to continue in that capacity." In Washington, where what isn't said is often more important than what is, those less than bracing words of support could have another translation: "Pack your bags." Altman could be forgiven if, four days later, he thought he heard moving vans coming up the driveway. On Friday the Senate Banking Committee opened hearings on whether White House and Treasury officials had intervened in a federal investigation of a failed Arkansas savings and loan with ties to the Clintons. Republican Senators charged Altman not only with lying to Congress about the extent and nature of those contacts but also with breaking federal rules of confidentiality by telling the White House about the progress and timing of the probe. Altman was in a good position to know. From March 1993 to February of this year, he was acting head of the Resolution Trust Corporation, the Treasury agency charged with cleaning up the nation's S&L crisis. Two Republican Senators told TIME that a senior RTC official told Senate investigators that as early as March 1993 Altman asked to be kept informed of "politically sensitive" cases. Thanks to Altman's efforts, the Clintons learned the extent of the RTC's probe of Madison Guaranty Trust--the bank owned by their friend and business partner James McDougal--in early October, eight days before the Justice Department did. For Altman, the new accounts of his disclosures to the White House could prove fatal. "Mr. Altman forgot," Senator Christopher Bond of Missouri told TIME, "that his job is to serve the nation, not just his old friend. Therefore, I believe his time is up and it's time for him to go." Altman's shifting explanation of his behavior proves once more that the axiom is true: it is the cover-up, not the original sin, that tends to bring down government officials. But to this axiom there is a Clinton codicil. Overschooled in damage control during the 1992 campaign, Clinton White House officials have exerted a kind of obsessive reluctance at every level to just let the government do its work. Evidence is growing that rather than allowing the RTC to try to recover the $47 million in lost taxpayer funds from the officers of a failed savings and loan, the Clinton team tried to monitor the agency's investigation and prevent strangers from taking control of it. White House officials plead the alternatives: they didn't try to influence the RTC probe, and besides, the investigation proceeded without obstruction anyway. Though special prosecutor Robert Fiske has cleared Altman of any criminal wrongdoing, congressional confidence in the former Wall Street investment banker is eroding so fast that he may be forced to resign within days. Four Democrats on the Senate Banking Committee believe privately that Altman has been seriously damaged. Senators Richard Bryan of Nevada and Barbara Boxer of California worry that Altman may have misled them. Nearly all the Senators will question him closely when he appears before the committee on Tuesday. Altman's worsening predicament sullied a week that had started out looking like a rare winner for the White House. Whitewater seemed poised to fade from the spotlight: House Banking Committee chairman Henry B. Gonzales proved he could stage farce on a grand scale by holding two days' worth of hearings that were designed not to inform but conceal. Gonzales opened the session with the strong suggestion that they were a waste of time and the confident assurance that "it is doubtful that any ethical standards were violated." The chairman prevented Republicans from raising questions about most aspects of the scandal and gaveled a Congressman out of order if he exceeded a strict five-minute rule. The White House sent chief counsel and eminence grise Lloyd Cutler to testify on the first day of hearings. Cutler's mild, 11-page account of 20 contacts between White House officials and those overseeing the federal probe of the Madison Guaranty S&L briefly seemed to take the air out of the hearings. But he had barely completed his testimony when he corrected himself, moving up by one week the time at which the White House knew the targets of the RTC's investigations. His assessment of the Clinton team's overall performance was a gentle scold: "I have concluded that there was no violation of any ethical standard, but that it would have been better if some of the issues that arose had been handled differently than they were." A much tougher reception lay waiting in the Senate, where Republicans on the Banking Committee had uncovered new details about Altman's efforts to keep himself and White House officials informed of the RTC's investigation of Madison Guaranty S&L. The Senate committee had a special reason to double-check Altman's story: at a hearing earlier this year, he repeatedly told the committee that he knew of only one meeting on the RTC case between the Treasury and the White House--on Feb. 2 of this year. Altman hewed to the line that the Feb. 2 meeting--attended by White House counsel Bernard Nussbaum and top White House staffers Harold Ickes and Margaret Williams--turned only on how the RTC normally handles cases when the statute of limitations on civil actions is about to expire. Altman said he provided no further information about the RTC's probe of the Madison failure. But his initial account was faulty; Altman amended his story four times in the next four weeks. More revisions may be coming. Several Senators now report that Altman's interest in the Madison case began nearly a year earlier. Republican Senators who have reviewed the evidence say Altman asked RTC senior staff members on March 22, 1993, to keep him personally informed of "politically sensitive" cases. When that meeting concluded, RTC senior vice president William Roelle pulled Altman aside and informed him of the ongoing probe against Madison Guaranty. Two days later, Altman faxed a copy of a 1992 New York Times story on Madison and Whitewater to White House counsel Nussbaum. On Sept. 24, 1993, with Altman's original request for updates in mind, Roelle told Altman about the progress of the RTC's probe into Madison. Roelle explained that the RTC was about to send to the Justice Department nine separate criminal referrals, including at least one naming the Clintons as possible beneficiaries--wittingly or unwittingly--of illegal activity. This was sensitive information that would not ordinarily be shared with parties to potential criminal cases. Altman told Roelle he would ask Jean Hanson, the Treasury Department's chief counsel, to call Roelle for a briefing. On Sept. 27, Roelle briefed Hanson on the case, reminding her that the sensitive information was for Altman's ears only. But Hanson maintains Altman directed her later that day to inform Nussbaum of the development. Hanson says she complied two days later, then wrote a memo dated Sept. 30 in which she reported the contact with Nussbaum and associate White House counsel Clifford Sloan. Altman does not recall telling Hanson to brief Nussbaum and says he doesn't recall receiving a follow-up memo Hanson addressed to him. Republican Senator Bond and some of his colleagues simply don't believe Altman. "He's clearly not telling the truth," says Bond. Secretary Bentsen, who surprisingly was neither interviewed nor deposed by special prosecutor Fiske, now faces additional questions about his role. So Cutler could prepare for the hearings, last weekend Bentsen turned over to him copies of interviews with Altman, Hanson and White House aide George Stephanopoulos that had been conducted by the Treasury's inspector general--this before the I.G.'s report had been completed. Sherman Funk, a veteran inspector general in Washington, called Bentsen's action "totally inappropriate." Roelle's statements to Senate investigators also cast doubt on the curious contention by White House officials during the House hearings that they were entitled to otherwise confidential information about the Madison probe because they would have to deal with "press inquiries" about it. Roelle indicated in his Senate deposition that he reported to Altman in September not in response to press inquiries but because he had learned from a regional RTC office that the criminal referrals were going forward. Indeed, the first media story about the referral did not break for another month. The White House's defensiveness about its interest in the case leads several Republican Senators to think the White House was interested not only in information but also in some measure of control over the RTC probe. During the Feb. 2 meeting, Nussbaum and other White House officials preferred that Altman not recuse himself from the RTC's Madison-Whitewater case. At the time of the session, Altman was leaning toward relinquishing his formal authority over the case, as he was advised to do by several Treasury colleagues, including Bentsen. But when the meeting got under way, the White House officials "reacted very negatively," wrote Josh Steiner, the Treasury Department chief of staff, who kept a detailed diary of the events. The White House, he noted, was very concerned about "turning the RTC" over to people the White House "didn't know." Last week his lawyer called the journal an "impressionistic" record of events; in late March, Steiner told TIME his diary was accurate. While Altman evidently had second thoughts about his cooperation with the White House, he sometimes seemed all too willing. Several Republicans charged last week that during the Feb. 2 meeting Altman went beyond simply explaining how the RTC works; deputy chief of staff Ickes told Senate investigators that Altman had reported at the meeting that the RTC's Madison probe would not be finished by the time the statute of limitations expired on Feb. 28. That was good news to Administration officials, who presumably knew the Clintons' potential civil liability to Madison losses would expire with the deadline. Altman's disclosure, said Senator Connie Mack, a Florida Republican, was like "showing your hand to an opponent in a poker game." (As it turned out, Congress extended the deadline.) Altman disputes the new account, saying, "No information of any kind was provided about the status of the investigation." Ickes' lawyer also disputed the G.O.P. Senators' characterization of his own testimony, saying that Ickes had only inferred from Altman that the RTC case was moving slowly. Casting more light on what Altman said in the White House on Feb. 2 will be a prime goal of Senators in this week's hearings. But many of them already believe Altman has been too damaged to continue at Treasury. </body> </article> </text>