In a plea bargain accompanying indictment and conviction for his role in this affair, Hale has claimed that Governor Clinton twisted his arm to set up an SBA loan to Whitewater, which duly came through within two days, thus remaking government well in advance of the Clinton-Gore administration. The $300,000 from the SBA to the Whitewater Development Corporation went in part as down payment for the International Paper parcel, which accepted a note from WDC for the balance.

The sale went through in March 1986. By October 1987 Whitewater Development had defaulted on its payments. International Paper filed a foreclosure lawsuit, naming the Whitewater Development Corp. and the McDougals; conspicuously missing from the suit were the names of Bill Clinton and HRC. There is no doubt that International Paper was doing the Clintons an enormous favor by offering them a cheap price for commercial property near Little Rock, and by the subsequent omission of their names from the foreclosure suit. During this period in the mid-1980s, Governor Clinton signed what became known as the IP bailout. This was the Manufacturer's Investment Sales and Use Tax Credit, which yielded the timber companies in Arkansas, including International Paper, $400 million in tax breaks.

By the time WDC defaulted on its payments, McDougal was a broken man, financially and psychologically. HRC sought and was gladly given power of attorney over the WDC. But from the events that followed, it appears that HRC was less competent to handle such matters than McDougal. For starters, under her stewardship Whitewater Development Corporation failed to file corporate income tax records for three consecutive years. These returns were eventually completed and filed by Vince Foster in the spring of 1993.

More serious were HRC's dealings with the banks holding the Whitewater mortgage. Despite repeated pleas from the McDougals and the Flippen bank, the Clintons refused to submit personal financial statements. When finally forced to comply or face the calling in of the loan, Hillary prepared a document for the Citizens Bank and Trust Co. that greatly overestimated the value of the Whitewater investment and their personal net worth. For example, HRC said the couple's stake in Whitewater was $200,000 when, in fact, the value of their investment was closer to $40,000. All told, HRC submitted at least three false financial-disclosure documents. This is a violation of federal law. Independent counsel Kenneth Starr has used similar violations to secure indictments against other Whitewater players, including Jim Guy Tucker.

In the mid-1980s, the Citizens Bank at Flippen was bought by the larger Twin Cities Bank of Little Rock. In 1986 the loan managers evaluated the Whitewater development and concluded that the balance of the loan far exceeded the value of the property. They recommended that the loan not be renewed. This recommendation was overruled by the executive officers of the bank, who at the time were seeking a favorable ruling from the Clinton administration on changes to state banking practices. The ruling soon went in Twin Cities' favor. Moreover, one of the vice-presidents at Twin Cities was Margaret Davenport, a close friend of HRC. On HRC's recommendation, Bill Clinton appointed Davenport to the board of the Arkansas Development and Finance Authority, whence she steered several large bond issues to her bank. In return, HRC and the Rose law firm were rewarded with business from Twin Cities Bank.

HRC thus stands exposed to indictment from the grand juries both for substantive crimes and for obstruction of justice. For these grand jurors, sitting in Little Rock and Washington, D.C., comparisons with Watergate or supposed absence of smoking guns are presumably not the issue. What they are looking at is a series of unsavory financial transactions involving the First Lady and her subsequent deceptions about her role in them. It has always been evident to anyone looking at the evolution of the Arkansas Development and Finance Authority, and at Bill Clinton's magical capacity to come up with political funding in moments of crisis, that there were many skeletons in Little Rock under the flimsiest of locks. Even today the press is forgiving. But now HRC's future and maybe Bill's are in partial fee to those grand jurors of Little Rock, who have known the couple a long time.

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