Clinton, D’Amato Fail To Resolve Whitewater Notes Committee Says First Lady’s Role In S&L; Bigger Than She Let On

Whitewater Committee Chairman Sen. Alfonse D’Amato and President Clinton failed to strike a deal Monday over the release of subpoenaed documents, setting the stage for a nasty Senate floor fight and a costly court battle.

This came as the committee introduced new evidence undercutting first lady Hillary Rodham Clinton’s claim under oath that as an attorney for the Rose Law Firm in Little Rock, Ark., she played only a small role in assisting a corrupt Arkansas thrift - Madison Guaranty Savings and Loan.

The White House offered to drop some of the conditions that Clinton had imposed before he would yield the notes from former White House Associate Counsel William Kennedy III of a Nov. 5, 1993, meeting with the first family’s private Whitewater attorneys and other administration lawyers.

Among the conditions the White House had tried to impose - but dropped Monday - was a demand that the committee recognize that the subpoenaed documents are covered by attorney-client privilege. Instead, the White House asked D’Amato, R-N.Y., to concede that Clinton has a “reasonable claim of privilege” as opposed to an absolute right of privilege over the notes.

But D’Amato dismissed the new White House proposal as unacceptable and argued that the panel would still have to bargain with other investigators to obtain information from the White House.

D’Amato said that unless the subpoena dispute is settled, he would bring the matter of enforcing them in court before the full Senate Wednesday.

The evidence of the first lady’s involvement with legal matters involving Madison Guaranty came in the form of handwritten notes from Clinton political adviser Susan Thomases of a conversation with Rose partner and former Deputy Attorney General Webster Hubbell, who is now serving time in federal prison for defrauding clients.

During the 1992 presidential campaign, Hillary Clinton asserted that she did not represent clients before regulators appointed by her husband, then the Arkansas governor. Madison’s owners, Jim and Susan McDougal, were partners with the Clintons in the Whitewater development. The McDougals are set to stand trial in March on criminal charges stemming from Madison’s failure. They deny wrongdoing.

Hillary Clinton sought approval for Madison deals with Arkansas state Securities Commissioner Beverly Bassett Schaffer - appointed by Bill Clinton at McDougal’s urging. The first lady also had “numerous contacts” with Madison officials and McDougal on financial matters at Madison, according to Thomases’ notes. Republicans said the notes indicated Hillary Clinton introduced McDougal to Rose attorneys handling various Madison transactions.