The Clintons' Brewing Micro-Scandal
York, Byron
HILLARY'S FAVORITE PLAN TO HELP THE POOR SOUNDS LIKE PURE COMPASSION. BUT TAKE A CLOSER LOOK AND YOU'LL FIND FUNNY MONEY, FRIENDLY BANKS, CLINTON CRONIES— AND ANOTHER SCANDAL ABOUT TO BLOW. BY...
...The issue will have to be settled in a House-Senate conference, probably in September...
...When the House staff arrived, they found that each file contained an evaluation memo, a four- or five-page document that outlined the pros and cons of each application...
...Two weeks later, Clinton wrote back: Because of our interest and early involvement with the Foundation, both Hillary and are [sic] gratified by the continued successes [sic] stories from your efforts...
...IT'S FREE MONEY...
...For her part, Mrs...
...Not only was Hawke's response vague—it also avoided the question of why the evaluations of the four Clinton-related institutions were undated...
...In addition, the investigators noticed that all four of the applications had been handled by Steve Rohde, the deputy director...
...Winter has returned the favors by actively and publicly supporting the president's programs—most notably the health care initiative...
...The investigation slowed to a crawl...
...Bachus also wanted to know whether the Treasury Department's inspector general had audited the program as a safeguard against abuse...
...And no, the inspector general had not audited the CDFI program...
...While the White House remains steadfastly committed to the program—early this year, the president announced his intention to triple its funding over the next five years—CDFI has become entangled in the budget process on Capitol Hill...
...they were just committed to paper a year after that process actually took place...
...On Thursday the 17th, a top Treasury Department lawyer called Moy in France to tell her that the investigators would be arriving the next day...
...in all, 268 institutions applied for the money...
...Those terms refer to the practice of banks making small loans to budding entrepreneurs in impoverished areas...
...Rohde had instructed his secretary to come in early on the morning of April i8 to type his handwritten memos...
...Together, the four institutions—which also happened to be the only for-profits among the grant winners —got nearly one-third of all the money that was given out...
...In another case, it appears that Bill Clinton himself interceded on behalf of an old friend and big campaign donor who wanted a CDFI grant...
...You have to ask the right question at the right time in the right way...
...People who had been involved in the competition were complaining to their representatives in Congress, who were forwarding the grievances to Bachus...
...It was very moving to me...
...But what was an obstacle for other applicants appears to have been no problem for Enterprise Corporation of the Delta...
...Judging by Rubin's words—let alone those of the Clintonsan outside observer might assume that the program was going to give money to banks, which would in turn loan the money to poor entrepreneurs...
...And what they are learning stands in stark contrast to the first lady's compassionate pronouncements...
...The report hasn't yet been made public, but according to sources on Capitol Hill, this is what Lau found: There had never been any evaluation memos in the Shorebank, Southern Development, Louisville, and Douglass files...
...The American Spectator September 19 9 7 selves think they cannot do anything leam that they can...
...The fall of 1996 was filled with politics...
...Clinton joined the bank's board of directors (she remained until late 1992, after her husband had been elected president...
...This confirms my strong conviction that the CDFI Fund's decisions with respect to awards were made solely on the merits...
...The bank's defenders pointed to South Shore as proof that an institution could make socially responsible investments and still make money (even though the bank has never been a great success and has now run into serious financial problems...
...That raised a red flag with us...
...Mrs...
...The idea of mothers and women coming together to support each other...
...Correspondence...
...Then Bachus waited...
...The winners were happy, and the White House pronounced the program a big success...
...It had been up and running for just a short time and had almost no track record...
...Southern Ventures was supposed to invest in minority and disadvantaged businesses, but in 1994 the government revoked its license—alleging that it made sweetheart loans to favored companies, overpaid consultants, and committed a variety of other abuses...
...He wasn't shy about advertising his Clinton ties...
...Bachus's subcommittee had planned to investigate the workings of CDFI as part of its normal oversight responsibilities...
...In addition, Governor Clinton established a state corporation that invested hundreds of thousands of dollars in the new bank—and loaned it hundreds of thousands more...
...JUST FOUR HAD NO DATES...
...Still, the obvious conclusion seemed nearly unthinkable: Had the Clinton Treasury Department been so bold as to ignore its own rules for awarding grants, give millions to friends of the Clintons —and then falsify records justifying the action when Congress inquired...
...c) Community Facilities...
...And he asked whether anybody involved in selecting the winners had any previous connections to the institutions that got the grants...
...Of the 268 applications, just those four—plus one other—were handled by Rohde personally...
...We're going to go to war if we don't get this thing straightened out...
...Hawke went on to claim that the evaluation process worked well—insisting that a scoring system to evaluate the applicants would have been unwieldy and inappropriate...
...Clinton's...
...So once Bachus heard that the issue had been kicked over to Lau, he believed it was more important than ever to keep up the pressure...
...In the meantime,he's gathering more information—and threatening a major fight if the Treasury Department does not change its ways...
...Clinton, who at one time was a member of the board of the Foundation," Winter told Moy...
...Things finally got going in March of this year...
...The two have stayed in touch since Clinton moved to the White House...
...Beyond that, many in Congress had questions about Valerie Lau, the department's inspector general...
...Over the last decade 31 the Clintons have touted micro-credit as an answer not only to Third World poverty but to the economic problems plaguing America's inner cities and rural hollows...
...But it turned out that Winter's organization was not a particularly strong candidate for a grant...
...No one directly involved in the program would respond to calls asking for comment...
...The issue might disappear into a black hole of investigation, meaning Bachus would get no information for months or even years...
...The businesses ranged from making tortillas to peddling auto parts...
...Instead, the program is designed simply to pump capital into institutions deemed worthy by the Clinton administration...
...Hubbell told the Senate he took the files for "safekeeping," eventually storing them in the basement of his home in Washington...
...But Bachus and the Republicans may want more...
...In 1984, Jan Piercy, who had been Hillary Rodham's roommate at Wellesley College in the 196o's, joined Shorebank as a top executive...
...the president has appointed Winter to several boards and commissions — including the new high-profile panel on race—and has also invited Winter to stay in the Lincoln bedroom...
...He was going to be writing evaluation memos, he said, but he and Moy had a question: Could the documents be left undated...
...The story involves a Mississippi-based organization called the Enterprise Corporation of the Delta...
...But now the initiative that began with so much hope is well on its way to becoming the latest scandal of the Clinton administration...
...There was just a smell about them...
...There was no problem, he said, because he intended all along to "tell the 35 truth" if he was ever asked about the documents' origin...
...Immediately after sending Bachus a copy of the report, John Hawke wrote to claim that the investigation actually exonerated the program...
...And then investigators found lots of correspondence in the files between Shore-bank and CDFI after the application deadline...
...HERE WE GO AGAIN These days the Treasury Department is not particularly eager to discuss the problems at CDFI...
...Potentially competitive applications were subsequently reviewed de novo by a panel...
...Still another is George Surgeon, who happens to be the president and CEO of Southern Development...
...The idea has long been a favorite of Mrs...
...The second idea that caught Mrs...
...Bachus plans to hold hearings on the CDFI scandal this fall...
...This panel determined which applicants would receive assistance from the CDFI Fund...
...He asked for the materials produced by Ernst & Young during its review of CDFI...
...On August 6, Rubin, eager to head off trouble on the Hill, sent a letter to Bachus...
...Hawke's bureaucratese seemed to suggest that it was all normal paperwork: These memoranda memorialize evaluations of and recommendations concerning applicants made during the initial stage of the review process when the CDFI Fund identified and ruled out applicants that were clearly not potentially competitive...
...The Clintons loved it...
...it suggests that if you look behind the new-age, community-empowerment rhetoric of other Clinton initiatives, you'll find old-fashioned, reward-your-friends corruption...
...Whatever happens, the administration has found itself with a lot of explaining to do...
...And then he added a threat...
...Rohde went to work, staying at his desk through the night of the 17th and the morning of the i8th...
...She ordered him to write evaluation memos for Shorebank, Southern Development, Louisville, and Douglass...
...But that is not the way CDFI actually works...
...Clinton had personal ties to South Shore, which is also known by the name of its parent company, Shorebank...
...They were the files of Shorebank, Southern Development, Louisville, and Douglass—the four with Clinton connections...
...b) Businesses that: (i) Provide jobs for Low-Income persons...
...Congressional investigators later found out that neither had recused themselves from considering the groups with which they had connections...
...We are confident that the Department of the Treasury does not consider it an acceptable or honorable practice," he wrote in a July 15 letter to Rubin, "for senior Treasury Department employees in positions of leadership to engage in conduct that has no other purpose than to mislead congressional investigators, so long as they intend to 'tell the truth' if ever caught...
...Shorebank got a lot of money— $4.5 million, more than any other winner...
...Once that was done, the process became an exercise in justifying decisions that had already been made...
...With that, Bachus went quietly ballistic...
...The new company was funded with $5oo,000 from the Small Business Administration...
...34 September 1997 • The American Spectator Fund's selections were based on merit," wrote John Hawke, who is Rubin's undersecretary for domestic finance...
...sitting in a tin-roofed shack, the women told their stories to the first lady...
...Clinton told the group...
...It does not take a savvy bureaucrat to see that the rules give the winning banks extraordinary freedom to use —or misuse—millions of taxpayer dollars...
...f) The provision of Consumer Loans (a loan to one or more individuals for household, family, or other personal expenditures...
...And remember the question of why CDFI had not used a scoring system to evaluate grant applicants...
...The [four] memos were unlike what was in the other files," says Bachus...
...The general counsel said no, instead advising Rohde to put the current date —April 17, 1997—on the papers he created...
...Just four had no dates...
...And just in case Treasury needed any more convincing, Winter also wrote a note to the president: Since you were so instrumental in helping to get the Foundation of the Mid South organized several years ago, I thought you would be interested in knowing what a successful enterprise it has become...
...Also, as James Ring Adams reported in TAS last November, the Arkansas teachers pension fund poured $1 million into Southern Development...
...in its first year, the plan called for CDFI to give $37 million to so-called community development banks as well as to nonprofit groups...
...To insure that the money would be spread around, Congress stipulated that no single institution could receive more than $5 million...
...The fund, he announced last year, would help "create jobs and revitalize neighborhoods in areas that have been left behind...
...The meeting apparently had a profound effect on both sides...
...But not everyone was smiling...
...But then something jumped out "We're going through these files and we notice that there were four evaluation memos that were undated," says an investigator who was there...
...Southern Development got $2 million...
...Another looked at the first lady and declared simply, "All the poor women, we are very proud...
...In mid-July, the department sent a copy of Lau's findings to Bachus...
...We have focused on the common problems of the three states of Arkansas, Louisiana and Mississippi, and in that effort have had the active participation over the years of President and of Mrs...
...And each of them—from a first lady to a bread-baker—possessed unique talents...
...Once in office, Clinton and the cash-strapped Congress scaled back that proposal but did manage —amid great fanfare—to enact a micro-enterprise program under which the government would award multimillion-dollar grants to banks that operated in impoverished areas...
...Clinton responded in words that seemed to spring from her years of liberal activism...
...Once the banks receive a grant, they can spend it on almost anything...
...FUNNY BUSINESS, PT...
...But as troubling as Rohde and Moy's apparent conflicts of interest might be, much more disturbing to Bachus was the lack of a reliable system to determine grant winners...
...And still Southern Development won a big new government grant...
...On May 27, Bachus received a response from the Treasury Department...
...After receiving the heads-up, Moy called Rohde...
...When he finished writing, Rohde ignored the advice he had received from CDFI's top lawyer...
...Almost immediately, word began to spread in the financial community that there might be something fishy going on at CDFI...
...For example, Treasury Department regulations allow grant winners to put the money into any of the following: (a) Commercial facilities that promote revitalization, community stability or job creation or retention...
...Would be a lot of baloney if they put a scoring system in place...
...He created documents that made it look like the four Clinton-favored banks had gone through the same selection process as the other applicants...
...He left the documents undated...
...The memos were dated May or June 1996, when the application process was in its final stage...
...Rubin sent the letter on to Moy...
...Treasury informed Bachus that Steve Rohde, who was deputy director of the CDFI fund, had worked for one of the grant winners (a nonprofit institution in New York) immediately before joining the Treasury Department...
...At that point, Republicans worried that the administration might simply be trying to buy some time...
...By early 1996, the Treasury Department had narrowed the applicants to about 5o finalists, and in mid-summer the department selected 31 winners...
...Oversight isn't a catand-mouse game," Bachus says...
...2 As damaging as the Shorebank revelations are, they are not the only examples of favoritism and corner-cutting at CDFI...
...And in a development that startled even Republican critics, investigators have discovered that Clinton administration officials falsified documents to mislead Congress about the grants made to Clinton-favored banks...
...Even so, it did not move very quickly...
...Rubin also announced a series of reforms at CDFI—and said that Kirsten Moy and Steve Rohde have resigned (although Moy intends to stay at CDFI until the next round of grants are made in October...
...With Moy gone, the department tried to stall Bachus...
...The review is something we would have done, curious or not curious," the congressman says...
...Several applicants complained that in selecting who would be given grants, the government ignored the very institutions the act had been intended to help and instead concentrated on rewarding a few favored banks...
...On April 16, 1996, Winter wrote a letter to Kirsten Moy...
...It turns out Ernst & Young asked the same thing...
...They ought to get out of denial and establish a standard of conduct," Bachus warns...
...It is an understatement to say the visit raised many questions in the minds of the congressional investigators...
...I am writing to express frustration over the failure of the Department...to provide a complete response to the questions contained in my letter," Bachus wrote the day after receiving Hawke's letter...
...Another member is S. Robson Walton, the chairman of Wal-Mart...
...or (3) Enhance the availability of products and services to Low-Income persons...
...36 September 19 97 The American Spectator York (Continued from page 36) was a 'virtual start-up' and 'risky," says Spencer Bachus...
...FALLOUT The facts of the case are, to say the least, devastating...
...I am sure that you appreciate that it would be a truly serious matter," Bachus wrote, "if documents are being prepared and inserted in the file for the purpose of misleading Congressional investigators...
...For another, Lau is the official who last fall conducted what appeared to be a politically motivated probe of two Secret Service agents who dared to cross the White House in the FBI files matter...
...Bachus faxed his request to Treasury on April 4. At the time, Kirsten Moy, the CDFI director, was in Paris, attending something called the World Economic Forum on Women Entrepreneurs...
...In 1986, they played critical roles, along with Shorebank, in helping establish the Southern Development Bankcorp, located in Arkadelphia...
...The scandal comes at a particularly bad time for CDFI...
...The House has agreed to raise CDFI's budget to $125 million next year, but a Senate committee recently voted to "zero out" the program...
...That seemed to suggest that Shorebank was orchestrating what should have been four independent applications...
...People out there were complaining that maybe there was something wrong with the grant process...
...They were the only files among the thirty-one winners that had no evaluation memos...
...Investigators have found that the administration manipulated the program to insure that large federal grants went to banks with ties to the Clintons...
...During the 1992 campaign, candidate Bill Clinton promised to spend a billion dollars to start 100 "community development" banks that would make micro-credit loans all around the country...
...The applicant is potentially competitive...
...I cannot make good tortillas or sell automotive parts, or make beautiful dresses or mosquito netting...
...But when Rubin's Treasury Department wrote the regulations that would govern the program, it left CDFI almost breathtakingly open to abuse...
...Also on the board was Mack McLarty, the president's close friend who would later become White House chief of staff...
...Even now, the first lady sometimes refers to the visit when she lobbies for an administration policy often called "micro-credit" or "micro-enterprise...
...And Rohde's boss, Kirsten Moy, the director of the CDFI fund, had been a volunteer adviser to another organization that won a grant...
...But when Rohde was interviewed by the inspector general, he appeared undisturbed by the implications of his actions...
...It all sounded very good...
...One reviewer indicated that it (Continued on page 78) ALL THE OTHER FILES HAD EVALUATION MEMOS WITH WHAT APPEARED TO BE THE PROPER DATES...
...Winter was devoted to getting a new Congress underway...
...On its board of directors is Donald Munro, who was listed among the "top 25 Clinton insiders" by Arkansas Business magazine...
...And the president himself signed on when he publicly thanked his wife "for beginning this obsession, almost, that we have with micro-enterprise...
...Clinton came across Yunus's ideas and began to incorporate them in her plans to create government programs in the United States aimed at helping women become economically independent...
...And that could mean that the money—together, the four banks received nearly $11 million —had in essence gone to Shorebank, violating the $5 million cap on grants to a single institution...
...The corporation was founded in 1994 by former Mississippi governor William F. Winter, a long-time friend of the president's...
...Clinton's eye was the concept of "community banking...
...The loans were quite small —as little as a few dollars, no more than a few hundred...
...On March 11, 33 Bachus sent a letter to Rubin, asking him to "describe in detail the review process, evaluation criteria, scoring system, etc., used to select CDFI award recipients...
...There was no mention of any scoring system — a widely used practice by which a government office identifies a set of priorities for a program and then ranks each applicant by how well it meets each criterion...
...Clinton rhapsodized for days about the experience...
...Rohde ordered that they be placed in the files that would be examined by the congressional investigators...
...Two years later, the Clintons even brought Muhammad Yunus to Pine Bluff, Arkansas, to help establish a micro-lending subsidiary called the Good Faith Fund (it turned out to be a dismal failure...
...Clinton, Piercy told them of the bank's work loaning money to would-be entrepreneurs in one of Chicago's worst neighborhoods...
...HILLARY'S PET PROGRAM The Clintons' plan to save America's poor is really a mixture of two ideas...
...The first lady's role in Southern Development is a topic of interest to Whitewater independent counsel Kenneth Starr, who has subpoenaed the records of Southern Development and several state agencies that supplied it with cash...
...Bachus wanted his investigators to stop by the next day, but the Department delayed the session until Friday, April 18...
...By that time, Bachus and his staff had learned that the Treasury Department had brought in the accounting firm of Ernst & Young to review the program— indicating the administration might be having doubts about its own handling of the CDFI grants...
...Clinton became Southern Development's lead legal counsel, and the bank and its subsidiaries reportedly paid Rose about $25o,000 in fees between 1986 and 1992.1 Soon the Clintons were promoting the idea that Shorebank and Southern Development could become models for a nationwide program of community development banks...
...Enterprise Corporation has submitted an application to the CDFI Fund at the Department of the Treasury for a $3 million grant to expand Enterprise Corporation's ability to service the needs of Delta area businesses....I hope, therefore, that you can see your way clear to indicate your support for this application which can do much for the region...
...But when it became clear that the congressman was eager to get his investigators in the door, they agreed to let them come on Friday, April 18...
...A department spokesman did answer questions, but offered few details beyond his assertion that the grant decisions were "all based on merit...
...The idea came to them that an organization like Shorebank could be a success in Arkansas...
...It's free money...
...In the 1980's, Mrs...
...Clinton was not paid for her work with the board, the new corporation did bring new business to her employer, the Rose Law Firm...
...And two other institutions related to Shorebank — Kentucky's Louisville Development Bankcorp and Douglass Bancorporation of Kansas City, Kansas—got $z.3 million and $1.9 million, respectively...
...On April 4, Bachus sent Rubin another request for information—and he also asked that his subcommittee staff be allowed to visit the Treasury Department to review the CDFI files...
...32 September 1997 The American Spectator wonks as CDFI...
...She arrived at seven a.m., and by ten the papers were ready...
...In one case, the president himself interceded on behalf of a wealthy friend who sought millions of taxpayer dollars...
...During Senate Whitewater hearings in February 1996, the first lady's former law partner Webster Hubbell testified that he removed the Southern Development files from the Rose Law Firm at the same time he removed files relating to Madison Guaranty, the savings and loan at the heart of the Whitewater investigation...
...He was to place them in the files before Bachus's investigators arrived at noon Friday...
...In the years that followed, she often said that she hoped to bring to the United States what Muhammad Yunus had brought to Bangladesh...
...A visibly touched Mrs...
...is a very important idea," she said...
...I could hardly catch my breath," she said later...
...He asked for nearly every piece of paper generated during the selection process...
...No doubt aware of the first lady's commitment to the program, Treasury Secretary Robert Rubin is said to have made CDFI one of his top priorities...
...Then the tortilla-maker spoke up, saying, "Thanks to God and FICA, I have been improving my life...
...If the interview team determines that the application is competitive, it will need to consider the risks and returns associated with investing in each initiative, to determine how most effectively to utilize Fund resources...
...And as all this was going on, Bachus's investigators received even more evidence of wrongdoing when Treasury released some of the papers created by Ernst & Young...
...It is not known precisely what Starr is after, but there are many questions about what kind of work Mrs...
...What was perhaps more troubling to Bachus was the Treasury Department's reaction...
...Nothing unusual there...
...That indicated that Shorebank and the Department might have been massaging the applications so that they would be a perfect fit when final selection time came...
...As it turned out, the department moved relatively quickly—perhaps because it knew that Bachus already had enough damaging information to exert significant public pressure should it delay the investigation...
...Rohde then went to the CDFI general counsel...
...That's when the trouble began...
...I cannot do the things you do," Mrs...
...The department's response seemed to confirm the subcommittee's suspicions that something was up...
...And that could lead to still more investigations as the story unravels over the next few months...
...For the past several months, congressional investigators have been taking a close look at how the Clintons' favorite program actually works...
...The complainers—who may have been motivated as much by their anger at losing as by a concern that the process work fairly—pointed out that the organizations that won the biggest grants just happened to be favorites of the Clintons...
...In the 198o's both Clintons discovered the South Shore Bank in Chicago, which had become a favorite among liberals for its practice of lending money in rundown neighborhoods ignored by other financial institutions...
...Clinton performed for Southern Development...
...THEY WERE THE FILES OF SHOREANK AND THREE OTHER ANKS WITH CLINTON CONNECTIONS...
...Other applicants said they were rejected for these same reasons...
...According to the auditors' notes, Rohde told them that "a scoring system clearly wouldn't work...
...Itappeared that Shorebank had prepared all four applications—not just its own...
...Early this year, when the first lady emerged from the low profile she assumed during the political campaign, she announced that micro-credit would be at the center of her agenda for the second term...
...The Department's decision to refer the subcommittee's inquiry on this specific issue to the Office of Inspector General without offering any substantive response is simply unacceptable...
...After Bill Clinton was elected president, his billion-dollar campaign pledge became a reality—albeit on a smaller scale —when Congress included it in the Riegle Community Development and Regulatory Improvement Act of 1994, passed a few months before the Democrats lost control of the House and Senate...
...The outside auditors found that CDFI made some of its grant decisions well before the selection process began...
...The contract, according to Senate investigators, resulted in a virtually useless 20-page report on the workings of Lau's own inspector general's office...
...or (g) Other businesses or activities as requested by the Applicant and deemed appropriate by the Fund...
...But this administration is making it that...
...Let me state unequivocally," Rubin wrote, "that this action [fabricating the memos] was a serious error of judgment...
...It did little to allay his suspicions...
...On August 7, the respected American Banker newspaper published a story headlined "Losers Hit Treasury on Community Lending Grants...
...He said he later turned the files over to Starr...
...Although Mrs...
...It turns out that in 1988 Southern Development set up a venture capital firm called Southern Ventures...
...If you don't, you get a misleading response...
...Even though Treasury had not answered the question, Hawke did reveal that the department was investigating itself...
...Women who themBYRON YORK is an investigative writer for TAS...
...And yes, the people who made the selections did have connections to the winners...
...That set off all kinds of bells and whistles," says a congressional investigator...
...For one thing, the Senate is investigating her decision to give a $9o,000 no-bid contract to a friend...
...The first, micro-credit, originated in Bangladesh, where in the 197o's a banker named Muhammad Yunus pioneered the practice of giving poor people — mostly women—small loans to help them start businesses...
...FUNNY BUSINESS The grant recipients were announced in late July 1996...
...The existence of the undated memos had not yet been made public, but reporter Glenn Simpson revealed information that made the selection of Southern Development as a grant winner seem even more questionable...
...The CDFI IT DOES NOT TAKE A SAVVY BUREAUCRAT TO SEE THAT THE COMMUNITY DEVELOPMENT FINANCIAL FUND RULES GIVE THE WINNING BANKS EXTRAORDINARY FREEDOM TO USE MISUSE —MILLIONS OF TAXPAYER DOLLARS...
...Their enthusiasm is really nothing new...
...But after hearing all the questions, Bachus decided to move the CDFI probe to the top of his list...
...The program would be run by the Treasury Department...
...Bachus raised the question in a May 9 letter to Rubin...
...The interview team will need to review the application in depth to determine whether or not the application is in actuality competitive, and if it is competitive, how much funding to provide, in what form, and for which initiatives...
...The act created something called the Community Development Financial Institutions Fund, widely referred to among policy THE WOMEN WERE SO IMPRESSED THAT THEY CHANGED THE NAME OF THEIR SMALL ANK FROM "MADRES UNIDAS" TO "MADRES UNIDAS ILLARY...
...The women were so impressed by the first lady that they changed the name of their small bank from "Madres Unidas" to "Madres Unidas Hillary...
...He asked about the undated memos, about the excessive grants to Shore-bank, and about the post-deadline correspondence...
...Southern Development was formed with an investment of nearly $5 million from the Arkansas-based Winthrop Rockefeller Foundation...
...And Enterprise Corporation's parent company, the Foundation of the Mid South, has had Hillary Rodham Clinton herself on its board of directors, as well as Walton and Bob Nash, who is now the White House personnel director...
...All the other files had evaluation memos with what appeared to be the proper dates...
...Here are some excerpts: I recommend that the applicant be given further consideration for funding...
...About the same time, Spencer Bachus, the Alabama Republican who chairs the oversight subcommittee, started receiving tips from all around Capitol Hill...
...The seriousness of the administration's misconduct threatens to do more than simply undermine the Clintons' micro-enterprise program...
...We are pleased that the Inspector General found no basis for concluding that the CDFI Fund improperly selected which applicants would receive funds," Hawke wrote...
...At least at first glance, it looked like Treasury might have steered the anti-poverty grants to the Clintons' favorite friends...
...And those undated memos...
...Not long after that, at a dinner with governor and Mrs...
...The article caught the eye of Republicans on the House Banking Committee...
...There were other strange things about the four files...
...IT WAS VERY MOVING TO ME," MRS...
...z) Are owned by Low-Income persons...
...d) The provision of Financial Services (e) Housing that is principally affordable to Low-Income persons...
...THE COVER-UP The story received its first mention in the press of May 15, when the Wall Street Journal reported that Bachus was questioning the grants that went to Shorebank, Southern Development, and related institutions...
...We thought, 'That's a little screwy," says a congressional investigator...
...For them, the issue has moved beyond corruption at CDFI to become a symbol of how the Clinton administration deals with Congress...
...And besides, he said, the memos were nothing more than records of a perfectly legitimate selection process...
...The American Spectator • September 1997 Not surprisingly, when the Treasury Department announced the grant competition, the banks lined up around the block...
...Adding a realistic touch to his work, Rohde wrote in the present tense, as if the memos had been prepared at the time the grants were awarded...
...We are poor, but we are struggling to survive," one began, telling the tale of how she started selling mosquito netting...
...To that end, an Ernst & Young examiner wrote, a senior CDFI official "instructed reviewers to emphasize positive information for those being 'passed' and to emphasize negative information for those 'failing...
...There was a certain noise level during and after the grant awards," Bachus said in an interview with TAS...
...Winter walked away with a $2 million grant...
...Her first stop was Nicaragua, where in a poor Man- agua neighborhood Mrs...
...They would probably manipulate it to make the end result whoever they want to receive awards...
...The American Spectator • September 1997 The department apparently went into crisis mode when Bachus said he wanted his investigators to examine the files...
...BY BYRON YORK n October 1995, first lady Hillary Rodham Clinton traveled to Latin America to promote her views on a variety of women's issues...
...CLINTON LATER SAID...
...In addition to Winter, the Enterprise Corporation of the Delta is filled with Clinton connections...
...I have forwarded a copy of your letter to Secretary Rubin at the Department of the Treasury to let him know of your personal recommendation regarding the Enterprise Corporation's application to the Community Development Financial Institutions Fund for a $3 million grant...
...The memos were in the files when Bachus's team arrived at noon...
...Clinton visited a group of women who had started small businesses with the help of loans from the Foundation for International Community Assistance, or FICA, a U.S.-backed aid program...
...Instead, he told Bachus that "to determine and verify the facts in response to your question, the Department...has asked Treasury's inspector general to review this matter...
Vol. 30 • September 1997 • No. 9
