McDougal's Memoir Lapses

...Bush's defeat by the upstart Arkansas governor Bill Clinton...

...As TAS reported in February 1994, Goldmine Springs was originally the idea of Whitener, a high school drop-out who had become a modest success through back-breaking labor...

...1 McDougal was a bit player in this circle, however, compared to Rose Law Firm Chairman C. Joseph Giroir, whose deals with FirstSouth S&L of Pine Bluff, the first billion-dollar thrift failure, caused Rose partners Webb Hubbell and Vincent Foster to mount a palace coup against him...

...One of the network newsmagazine shows recently tried to portray Ms...

...Only twenty pages later does McDougal blurt out that Harris had become Susan's lover...

...He fails to mention that this woman had been in charge of the 1984 federal examination of Madison Guaranty which produced only light criticism...

...TWICE A CUCKOLD With these results, it's surprising that any of McDougal's former associates should remember him, not with cold anger, but with sorrow and lingering affection...

...The absence of other drugs," said Washington Weekly, "could mean that prison officials withheld these medications, or it could indicate the autopsy results are suspect...

...Last November, the prison acknowledged that McDougal had been ordered to spend seven days in "disciplinary segregation...

...Little interested in This background is entirely missing from McDougal's verpolicy, they buy sion, and in truth, he had a shorter stay at the jumbo CD trough shirts and pour than most...

...When the owners squandered the money, through bad investments and high living, the government turned to the taxpayers to make good on the deposit insurance, to the tune of nearly $2oo billion...

...There have been too many attempts to sweep the details of his troubled life, and now his death, under the rug...

...McDougal's father owned grocery stores in Bradford, a small railroad town about an hour's drive northeast of Little Rock, and like many such shopkeepers, he was the main source of credit for his rural customers...

...John Paul Hammerschmidt, the long-time incumbent in northwest Arkansas, "or one of his Republican agents," because McDougal was running against the congressman...

...The Tarrant County Medical Examiner's Office subsequently announced he had died of "hypertensive atherosclerotic cardiovascular disease...

...God only knows where that inflated figure came from," he writes of the $6o-million bailout...

...Like most of the high rollers, McDougal was a salesman, a real estate developer, and a political junkie, not a banker...

...With little interest in making policy, they buy shirts and pour drinks for the real powers, and parlay their connections into fast-buck business deals...

...Although it's not clear whether the Prozac contributed to his death, it might have made it difficult for him to urinate...

...At any rate, Pat told Susan he didn't want her "within a mile of Bill Clinton...

...the grandiose Charles Keating called on five U.S...

...Harris has recently cut a figure on network news as Ms...

...This was the perverse structure of the 1980's financial debacle...

...The drinking was just as hard in Washington when McDougal was rewarded for his work on John Kennedy's presidential campaign with a staff job on Senator John McClellan's Rackets Committee...

...Owners were given a free hand to invest the money pouring in through jumbo CDs, and the government picked up the risk, by insuring the first $loo,000 of each depositor's account...

...The mounting problems at Madison Guaranty eventually pushed it under, even in the hands of the management team that replaced Jim and his young wife Susan...

...Some might look at her record of contempt of court and her California state indictment on unrelated charges of embezzlement from the conductor Zubin Mehta and reach a different conclusion about her character...

...At least one could ask why someone in fragile health was left unobserved...

...In an interview on November lo, McDougal told the Associated Press that his punishment coincided with news reports about the discovery of a cache of Madison documents in the trunk of an abandoned Mercury Marquis in Little Rock...

...McDougal's fiancé and spokesman, it's worth reviewing the repressed jealousy and awakening suspicion in Jim McDougal's narrative...

...The notion that McDougal was "silenced" seems far fetched, however...

...Clinton's chief financial regulator, Beverly Bassett Schaffer, has of course denied giving McDougal any special treatment...

...Noland Hagood, his personal physician...

...By 1985, Jim's relations with Susan, twenty years his junior, had cooled to ashes, and she left for an extended stay in Dallas...

...McDougal was widely considered a deeply flawed witness who would do more harm than good to whichever side put him on the stand...

...it showed no other drugs in McDougal's body, although according to Dr...

...McDougal later heard, he writes, that Pat Harris refused to let Susan deliver the box of documents in person: He knew Clinton's reputation around women...

...According to the inmate, McDougal was called up for a urine sample during the recreation period on Saturday, March 7. "We believe this was direct HARASSMENT for Jim," said the letter, "because he neither smoked used drugs or alcohol...

...Himself a model of snappy dressing on a limited budget, he comments on items of clothing at least thirty times in his first loo pages...

...It was only after he befriended Bill Clinton, and worked for a while in his first administration, that he bought his first bank...

...When he finally opened a branch in his hometown, he resolved to give these "marginal" borrowers a break, and many there still remember him fondly for giving them their first mortgage or car loan...

...He says he returned the favor years later when he attended the White House deposition of Bill Clinton for his own 1996 criminal trial and privately secured a promise that Susan would be pardoned...

...Since Mr...

...Hawkins as a victim of Ken Starr's hounding, but it would seem he has a number of serious questions to ask her...

...His engaging but shallow personality comes across in a memoir filled with fashion critiques...

...It's not clear why or whether these incidents should be related, but like the rest of the questions about McDougal, they deserve close and critical scrutiny...

...The Carter and Reagan administrations invoked the slogan of financial deregulation to produce a hybrid with no trace of free-market discipline...

...McDougal was unable to comply on demand, a problem he had in the past...

...Plunged into a deep depression, he remembers gratefully that in spite of their estrangement Susan visited every day and provided a woman to care for him...

...Thereafter he would be bending the rules...

...He hobnobbed as well with Senator William Fulbright and the memorable chairman of the House Ways and Means Committee, Wilbur Mills...

...But the go-go bankers gladly offered a high rate of return for the sake of getting their hands on a large pool of cash...

...According to the Washington Weekly web site, the preliminary autopsy showed a very high level of Prozac, a 6o-milligrama-day dosage...

...Sunday, during Count Time, McDougal was found face down on the floor of his cell and rushed by evacuation helicopter to a Fort Worth hospital...

...But then neither have their apologists in the press nor the politicians, such as Bill Clinton, who tapped them for campaign money...

...These "jumbo CDs" were generally for the maximum amount covered by federal deposit insurance, making them a no-risk investment...

...He devotes one paragraph to his Goldmine Springs project near Bradford, mainly to describe the advertising campaign concocted by his second wife Susan...

...McDougal was deeply impressed by the hard time local hard-scrabble farmers had in getting loans from the local bank...

...After a much more searching 1986 examination drove McDougal from control of the thrift, she took over as its president...

...As might be expected, McDougal's political pull exerted its full force over state regulation...

...He turned his up-country bank over to local managers and moved back to Little Rock in 1983...

...It seems Ms...

...Governor Clinton himself once personally attended a State Health Department meeting about septic tank permits for one of McDougal's real estate developments...

...The ticket to their frenetic ride was a political protector, purchased dirt-cheap with campaign contributions, who could call off the demoralized examiners trying to provide what was left of government supervision...

...They would take over a sleepy institution and swell its deposits ten-fold by offering high-interest big-money certificates of deposit on Wall Street...

...McDougal had Bill and Hillary Clinton...

...McDougal forgets to write about his financial victims, if he ever thought about them, but some people were hurt plenty...

...Whitener and his family reserve their fury for Susan McDougal and her associate Pat Harris, who helped make McDougal such a pathetic figure...

...This may indeed be all there is to the story, but documents are emerging that make this negligence seem scandalous enough...

...Readers of TAS may remember, however, what happened to McDougal's partner in this venture, the local road-builder Freddy Whitener...

...Clinton's personal lawyer David Kendall disputes this story The American Spectator August 1998 on the grounds that he never left Clinton alone with McDougal during that session...

...At the end it was W. Hickman Ewing, Starr's chief deputy, who delivered the eulogy at his funeral...

...Ai 37...

...To McDougal, the dubious self-dealing between his thrift and his real-estate development subsidiary, Madison Financial Services, was as respectable as anything in American business...

...The hostile 1982 bank examination, he claims, was inspired by Republican Rep...

...When he regained access to the project's records two years later, he found that McDougal had saddled him with nearly $2 million in debt, using promissory notes drawn on Goldmine Springs to cover overdrafts in Madison Guaranty and other real estate deals, including Whitewater...

...THE LONELY END OF JIM McDOUGAL To Susan's credit, she did stick by Jim at one of his lowest points...

...At the end of May the Washington Weekly web site posted several letters written by McDougal's fellow inmates to Dr...

...This quadrangle created an interesting tangle of jealousies, with some bearing on the Whitewater investigation...

...Schaffer has a story to tell and some inducements to tell it...

...The web site pointed to another anomaly in the preliminary report...

...Hagood as many as six medications might have been needed to treat his heart condition and high blood pressure...

...perhaps he suspected that Susan and Bill were more than just friends...

...He brags about expanding the deposit base of his first flagship, the Madison Bank and Trust, without mentioning that this was the pattern of the high-flyers...

...The connection that started McDougal's financial career came from the new generation of Arkansas pol, however...

...McDougal complained in particular "because of the blood thinner medication the Medical Department was requiring him to take...

...The help he gave Independent Counsel Kenneth Starr's investigators remains to be proven in court, but he apparently won their personal respect...

...He says in passing that "tempering my wrath at government examiners, I even hired one of them, Sarah Hawkins, as a compliance officer...

...This self-justification was undoubtedly sincere...

...The American Spectator • August x998 entourage...

...To the end, McDougal blamed his regulatory problems on politics...

...In McDougal's world, all his real estate ventures were eventually bound to make money, even a hare-brained scheme to subdivide stretches of the mud flats on Campobello Island...

...One question concerns the whereabouts of the Whitewater Development Corporation business records, which Susan has always maintained she delivered to the Governor's Mansion at Hillary's demand...

...But McDougal had no company at all at his demise March 8 at the Federal Medical Center in Fort Worth, Texas...

...Yet it's provocative that Clinton's lawyers went to great lengths early in Starr's investigation to keep her on their team...

...Broken, financially ruined, and physically more threatened than he realized, McDougal suffered a stroke in 1986 just after federal regulators removed him from Madison Guaranty...

...McDougal suspected that he had been cuckolded by at least one other, namely his business partner and old friend Bill Clinton...

...About 10:20 a.m...

...McDougal was a pure specimen of the go-go financiers who took over S&Ls during the eighties "deregulation" and left the rest of us to pay for a $200-billion fiasco...

...McDougal, in short, was one of those political hangers-on who thrive simply on being part of the JAMES RING ADAMS is an investigative writer for TAS...

...Awed by McDougal, a hero from their schooldays who had returned home, and grateful for his generous lending, Freddy turned over control of the finances to the Madison team...

...But this cynicism took forms at which McDougal only hints...

...He was immediately called to the lieutenant's office, his hands were handcuffed behind his back, and he was delivered to the Hole, solitary confinement...

...His posthumously published memoir surely doesn't tell the whole story, but for its detailed picture of the high-living lowlife of Little Rock, and of the S&L sharpies who glommed on to '80s politicoes, it repays the closest scrutiny...

...Whatever he may have told Starr's people, he left behind a remarkably one-sided and self-serving memoir about this new career...

...Yet the pathos of his condition blunts the indignation...

...In his book he compares this on-going shell game to the auto-loan unit of General Motors...

...The charge against Hammerschmidt is sheer speculation, and there is little doubt that McDougal was bending the rules from the beginning of his career...

...It remains to be seen whether the Independent Counsel can prove these bribery charges, and there are inconsistencies in McDougal's stories...

...MCDOUGAL AS HIGH-FLYER In the heyday of the S&L scandal, a network of the most notorious Texas thrift owners became known as the "high-flyers," which by some obscure convention they always spelled with a y. Their spectacular failures earned them their own Justice Department task force, which at last count had secured more than 25o convictions...

...This project on an inaccessible stretch of the Canadian border caught McDougal's fancy because his political hero Franklin Delano Roosevelt had summered there...

...Thus one ironic result of the debacle was George of the entourage...

...A federal bank examination in 1982 raised red flags drinks for the real about McDougal's enthusiastic lending, not only to local farmpowers, and parlay ers, but to his circle of political insiders, including Jim Guy their connections Tucker and Bill and Hillary Clinton...

...McDougal took a patronage job as assistant reading clerk in the Arkansas legislature at the age of 18 and found that alcoholism was an occupational hazard...

...36 August 1998 • The American Spectator When the Resolution Trust Corporation took over Madison, it drove Whitener into bankruptcy and seized his house...

...Still in a state of denial, however, McDougal in his memoir gives only the rosiest picture of his business...

...After providing much of the entertainment value in White-water and promising at the end to solve its mysteries, James Bait McDougal died in March leaving as many questions as ever unanswered, at least publicly...

...35 The bill would very likely have He was one of those been much higher if not for some Federal Reserve manipuhangers-on who lations which boosted bank profit margins and deepened the thrive on being part 1992 recession...

...McDougal was the primary source for Times writer Jeff Gerth in 1992, and he reveled in playing both sides of the ensuing scandal, revealing, denying, and finally confirming the damaging details of Bill and Hillary Clinton's venality...

...Judging from his posthumous memoir (Arkansas Mischief, Henry Holt, $25), he never really acknowledged the wrong of the "outlaw" behavior that he shared with so many savings and loan "high-flyers" of the mid-198o's...

...He could browbeat pesky regulators from offices as far afield as the State Geologist...

...McDougal hired Harris as the deputy campaign manager for his 1982 run for Congress and liked him so well he later took him into his business in Little Rock...

...A cloud even hangs over his demise in solitary confinement this March, on the sixth anniversary of the New York Times article that first broke the story of the Whitewater Development Corporation...

...dies was to cut off his access to brokered deposits...

...Her husband Archie Schaffer, the chief spokesman for Tyson Foods, is currently being tried on charges from the separate investigation of former Agriculture Secretary Mike Espy...

...senators (including John Glenn...

...Texas freebooters kept former House Speaker Jim Wright in their pocket...

...But his friendship with the Clintons required some reinforcement, if one of McDougal's most startling assertions can be believed...

...The timing is an amazing coincidence," McDougal said...

...McDougal says he learned later that Harris flew there every week "to be with her...

...The authors' names were withheld, but on main points the letters coincide with the official version...

...He claims that sometime in 1984 he began to use fake billing and kickbacks to generate $2,000 in cash each month to be used for direct payments to Governor Clinton...

...Later, to his relief, he made arrangements to pay themoney as an above-board monthly retainer for Hillary's legal services...

...According to the inmate letter, temperature in the Hole is kept at 6o degrees, a cause of great discomfort...

...This is the woman that Geraldo Rivera and Cochran & Company sporadically try to build into a "Joan of Arkansas" for her refusal to testify before the Whitewater grand jury...

...He was able to name his own people to the state Board of Savings and Loans...

...But McDougal suppresses the darker side of the picture...

...Coincidentally, Bill Clinton was back in the Governor's office after two years in the wilderness...

...Remarkably few questions have been raised about the death of such a highly visible prisoner while in solitary confinement...

...But McDougal and Madison Guaranty did indeed have a charmed life with the state bureaucracy...

...One of the first remeinto fast-buck deals...

...The legitimate questions about his death, so far of interest only to a few "anti-Clinton" web sites and some of his fellow inmates, concern federal prison medical practice...

...McDougal had a strong spiritual affinity with this group, as well as some still relatively unexplored business connections.' He shared above all the rationalization that he was a populist helping out the little guy...

...The bailout cost taxpayers an estimated $6o million, although the accounting was so bad no one was sure for quite a while of the exact cost...

...McDougal said the experience gave him "an outlaw's mentality...

...Running not far second as a trope are his recollections of drunken legislators...

...Frustrated by vigilant federal bank supervision, McDougal transferred his operations to his much more loosely regulated savings and loan, the now-famous Madison Guaranty...

...This fatal weekend was not the first time McDougal landed in the Hole because of his failure to give a urine specimen...

...Whitener, for one, still can't bring himself to speak harshly about the man who, he says, always treated him with great courtesy...

...Hagood confirmed McDougal had taken the drug for several years to treat manic depression, but didn't say who would have prescribed such a high level...

...With help from Hillary, Madison Guaranty was able to get favorable decisions from the Arkansas Security Department that overruled its staff recommendations...