10 CLINTON AIDES CALLED IN INQUIRY ON ARKANSAS S.&L.
By Douglas Jehl
Ten senior White House and Treasury Department officials were subpoenaed tonight for testimony and documents related to an inquiry into a failed Arkansas savings and loan with ties to President Clinton and his wife. While Federal Bureau of Investigation agents were serving the subpoenas, President Clinton met with the White House counsel, Bernard W. Nussbaum, who was one of those subpoenaed, to arrange the lawyer's resignation. Mr. Nussbaum told Mr. Clinton that he would step down on Saturday, aides said. On an extraordinary day in which Mr. Clinton and his aides tried to contain the political damage, they battled a rising tide of bad news, including signs that some Democrats were quietly joining the Republican clamor for Congressional hearings into Mr. Clinton's investment in an Arkansas real estate venture, the Whitewater Development Company. The Clintons were partners in the venture with James B. McDougal, the head of the savings and loan. Information Quest The subpoenas were issued by Robert B. Fiske, the special counsel appointed to look into the Whitewater matter, but there was no indication that they were for any purpose other than the gathering of information. All 10 of the officials were named in news accounts this week as having taken part in unusual meetings to discuss the Federal investigation of the Arkansas savings institution, Madison Guaranty Savings and Loan. Mr. Fiske has broad-based authority under his charter to determine whether the Government has handled itself properly in that case. Not since the Iran-contra affair has a Federal law enforcement agency reached this deeply into the White House as part of an official inquiry. The subpoenas of top aides to Mr. Clinton and to Treasury Secretary Lloyd Bentsen handed the White House a major embarrassment as officials tried to steer attention away from Whitewater. Sensitive Subject At those meetings, the Treasury and White House aides reviewed the status of an investigation by the Resolution Trust Corporation into Madison Guaranty, a sensitive subject that would ordinarily be kept from political officials and anyone with a connection to the institution. No one has suggested that there was anything criminal about such discussions, but they might have violated Government ethics regulations. The six White House aides subpoenaed to testify were Mr. Nussbaum; Bruce Lindsey, a senior adviser to Mr. Clinton; Harold M. Ickes, the deputy chief of staff; Mark D. Gearan, the communications director; Maggie Williams, the chief of staff to Hillary Rodham Clinton, and Lisa Caputo, Mrs. Clinton's press secretary. All were ordered to appear in Federal District Court in Washington on March 10 to provide testimony for a grand jury in Little Rock, Ark. A separate subpoena demanded that the White House surrender all documents and communications relating to contacts between the White House and Treasury Department officials about Madison Guaranty. In response, Joel I. Klein, the deputy White House counsel, issued four memorandums ordering the White House staff, janitors and technicians not to destroy information and documents in files, computers, waste baskets and burn bags. Howard Schloss, a spokesman for the Treasury Department, said Deputy Secretary Roger C. Altman; Jean Hanson, the department counsel, and Josh Steiner, Mr. Bentsen's chief of staff, had also been subpoenaed to appear before a grand jury under the direction of Mr. Fiske. A participant in the meetings said that Jack DeVore, Mr. Bentsen's closest aide at the time, was also told to appear before the grand jury. Associates of Mr. Nussbaum said that he had hoped to postpone his resignation long enough to diminish the impression that he had been dismissed but that he had recognized as the day progressed that he had little option but to step down immediately. As soon as the first meeting was disclosed, Republicans began demanding a new inquiry into the Clintons' investment and put pressure on Mr. Clinton to act firmly to disavow the talks. Today, some Democrats also seemed to be considering hearings on Whitewater. Expectations for a Day Mr. Clinton had to cope with the question of Mr. Nussbaum's fate on a day in which a meeting with President Leonid Kravchuk of Ukraine was supposed to be the main event. At a picture-taking session and a joint news conference in the East Room, the first question to Mr. Clinton was whether Mr. Nussbaum, who is 57, would remain at his post. Mr. Clinton later added discussions with top aides to his afternoon calendar to consider that very question. But the White House agenda became even more complicated late this afternoon, when the F.B.I. told William H. Kennedy 3d, an associate White House counsel, that it planned to serve the six subpoenas. Mr. Kennedy told Thomas F. McLarty 3d, the White House chief of staff, who told Mr. Clinton about 6 P.M., just before he began to talk with Mr. Nussbaum. An F.B.I. agent served the six subpoenas about an hour later in the White House counsel's suite. In a written statement tonight, Dee Dee Myers, the White House press secretary said, "The White House will comply fully and promptly with the subpoena." Before the latest round of criticism over his role in the Whitewater affair, Mr. Nussbaum had already been at the center of a series of White House political miscues, including the failed nomination of Lani Guinier to a top Justice Department post, the torturous search for an Attorney General and the removal of files from the office of Vincent W. Foster Jr., Mr. Nussbaum's deputy who killed himself in July. Officials said that history, coupled with Mr. Nussbaum's most recent actions, had left his position difficult to defend, especially after officials said that the once-unquestioned support of his political patron, Hillary Rodham Clinton, was in doubt. A Telling Symbol "If this was the first time in the barrel for him, maybe we could fight for him," a senior White House official said. "But the third time is hard." Earlier today, Mr. Clinton refused twice to comment about Mr. Nussbaum's fate, a telling symbol in the Washington political lexicon. The President was said by aides to be particularly upset that the White House lawyer had not anticipated trouble from the series of meetings with senior Treasury Department officials on the investigation into the bankrupt Arkansas savings and loan. Associates of Mr. Nussbaum said he would have preferred that a decent interval pass before he resigns his post. But they said Mr. Clinton's failure to express confidence in him during public appearances today could only have been intended as a message that it was time to leave. Other officials said aides to Mrs. Clinton had told associates in the Administration that she was disappointed in the way Mr. Nussbaum, her one-time mentor, had handled the matter. Because of her close friendship with Mr. Nussbaum, Mrs. Clinton's views on the issue are crucial. Even this morning, a close friend of Mr. Nussbaum's said, "None of us see how he can survive much longer." Before this week's first disclosure of his participation in an unusual meeting, Mr. Nussbaum had told friends that he believed his job was to be a kind of a lightning rod for the Administration. But he told the friends that he hoped to stay in the White House for at least another year, if not until the end of Mr. Clinton's first term, and had recently bought a residence at the Watergate Apartments. Consequences of a Resignation By this afternoon, senior White House officials were discussing what the consequences of a resignation by Mr. Nussbaum might be, and whether it might help close the political wounds inflicted by the disclosure of the meetings. Mr. Clinton on Thursday expressed dismay that the meetings had taken place, but that only led Republicans in Congress today to voice new complaints about the White House's conduct. After poking for months at Whitewater's embers, the Republicans expressed new confidence that the missteps would finally force Congress's Democratic majority to undertake hearings. And, more dangerously for the White House, some Democrats began to echo them privately. In the Senate, where Republicans were already pledging to hold up approval of important White House nominations until a Whitewater hearing was scheduled, aides to senior Democratic senators said there was growing uneasiness among their bosses. Saying that they were growing resigned to the possibility that some kind of inquiry might be necessary, if only to quiet the mounting furor from Republicans and other critics, the aides said the matter had been referred to Senate Democratic leaders. In addition to Mr. Nussbaum, only Ms. Hanson, the Treasury Department's general counsel, took part in all three of the briefing sessions. The two were the only participants in what White House officials have described as the most troublesome encounter, on Sept. 29. In that meeting, Ms. Hanson told Mr. Nussbaum that the Clintons would be mentioned as possible beneficiaries of illegal actions in a request for a Justice Department investigation of Madison Guaranty by the Resolution Trust Corporation, which is responsible for failed S.& L.'s. That was more than a week before the R.T.C. formally referred the case to the Justice Department and before the decision became final, giving Mr. Nussbaum advance knowledge of information that under other circumstances is regarded as highly sensitive. Meetings in Question Another meeting took place in October and the third, last month. The others who were served subpoenas attended these meetings except Ms. Caputo. She acknowledged this week that she had received a brief telephone call from a Resolution Trust Corporation official whose name she did not know. At his news conference with President Kravchuk today, Mr. Clinton sought to emphasize that with new procedures imposed on Thursday the White House has now erected a "a clear and appropriate firewall" to prevent further contacts between his aides and Federal investigations into Madison Guaranty and the Whitewater case. Seeking to turn the focus to his critics' conduct, Mr. Clinton accused the Republicans of engaging in "fairly blatant, bald and totally political" efforts to make an issue of the meetings, in which he said he had not been accused of "doing anything wrong." The Senate Democratic aides who spoke of uneasiness about the turn the Whitewater case is taking said the chamber's leaders were already mulling over the possibility of Banking Committee hearings into the propriety of the meetings, if only to cut their political losses. "They have the discomfiting feeling of watching the Administration make every mistake they could think of," said one aide, who spoke only on the condition of not being identified. "Now they're thinking, 'How many more town meetings can I go to before being asked about this? What do I say if I'm asked about it on 'Meet the Press?' "
