Hell To Pay Part 7

At first, we were told that Hillary "consulted with numerous people, and did her own research," an aide to the first lady explained.*37 The American people were left with the image of Hillary, shrewd investor, thumbing through the Wall Street Journal.

Then the White House acknowledged that she had indeed received a small helping of advice, "but not on a specific date or specific trade."

The White House next conceded that Jim Blair--Springdale lawyer, former Fulbright aide, major figure in the Arkansas Democratic party, and the man Bill Clinton later married to Diane Kincaid--was one of several people who had given Hillary some advice in dealing with the market. When that story would no longer hold, Dee Dee Myers--always one of the most forthright, and therefore routinely humiliated, members of the Clinton team--said, bluntly, "I think it's become clear that [James Blair] placed most of the trades."*38 But surely he had been guided by the Wall Street Journal.

Blair, of course, also worked for Tyson Foods, the poultry giant and largest employer in Arkansas, and a major Clinton donor. He bought land and made deals on behalf of the corporate giant. He would later become the company's general counsel.

The company is run by "Big Daddy" Don Tyson--a man who wears a khaki uniform, which is required of all employees, with his name st.i.tched on its breast; a political kingpin; a wheeler-dealer and corporate egoist. In keeping with his oversized persona, and perhaps the helping hand his general counsel gave to the president-to-be, Tyson's office is a replica of the Oval Office.

"It would be irresponsible to my company and my industry if I didn't have any influence," Tyson said in a speech in Alabama. "Clinton understands the needs of business. There were several times in our company's growth that we could have taken opportunities outside of the state, but we chose to stay in Arkansas because he understands the balance between economic development and environmental issues."*39 Hillary's cattle futures were purchased through Robert L. "Red" Bone of the brokerage firm of Refco, Inc. It was Jim Blair who had put her in touch with Bone--who had previously worked for Tyson for more than a decade. Bone was an inveterate gambler, a high-profile, high-stakes poker player well known to the pit bosses of Las Vegas.

He was a gambler at the office as well. The year before, Bone's sharp practices had led the Chicago Mercantile Exchange to accuse him of allocating trades to investors after determining the winners and losers, a practice known as "straddling." Bone was punished by having his license to trade pulled for one year.*40 The deal was arranged in the following way. All Hillary had to do was put $1,000 of her own money into a block of cattle futures at a time when her husband, then the attorney general, had a thirty point lead for the governorship.

How did Hillary make out?

From her initial investment of $1,000, she came away with $99,537.

Among the community of experts, there is general agreement that between 75 percent and 90 percent of commodity players lose. And no one turns $1,000 into $100,000. "The average retail customer has about as much chance of that kind of success as I have of driving to Hawaii," one Chicago-based investment advisor noted.*41 At one point in the trading, Hillary was $60,000 in the hole, with less than $40,000 in her account. Typically, an investor would be asked to pay the margin. Hillary was not, and she held on to the commodities until she hit pay dirt. (Later, the White House would explain that she quit at that point because she was pregnant with Chelsea, and just did not need the additional stress of investing.) On July 12, 1979, Hillary's relationship with Refco remained intact even though she owed more than $100,000; but poor Stanley Greenwood, a fellow Refco investor, had his investments terminated when he failed to post $50,000 to cover his losses.*42 By way of comparison, had Hillary instead invested $1,000 in the first offering of Microsoft stock in 1986, she would have made $35,839 by March 1994. The premier technology investment of our times, therefore, pales in comparison to what she had made on the world's oldest commodity: livestock. Hillary's cattle future investment gave her a 9,987 percent profit.*43 Later, when asked of her incredible success as a novice in the tough world of commodities trading, Hillary denied any preferential treatment with the illuminating statement: "I was lucky."

Unless you believe in good fairies, luck had nothing to do with it.

It is pretty obvious that Hillary had something better than luck.

She had well-placed friends who wanted her to have $100,000. The likelihood of such a return on such an investment was close to lottery odds, twenty-four chances in a million.*44 This was in a decade in which no speculator made more than $400 profit a day with one contract of cattle futures. Yet Hillary managed to make $5,300 a day. Such a return would have required her holding thirteen contracts, involving 232 tons of beef with a value of $280,000.

The New York Post explained, "There is no way that the commodity exchange or a broker would permit a novice speculator to control $280,000 worth of cattle with a skimpy investment of $1,000. Not, that is, unless a friend, guardian or partner guaranteed her investment."*45 It seems unlikely that Hillary could have been unaware of the magnitude of this straddle or that her wins were at the expense of others. (Blair himself was a designated loser, losing millions on the cattle deals.) Many commodities traders suspected Hillary of allocated trading--an illegal procedure in which a broker buys block trades, waits for the win, then allocates it to favored customers after the fact. Just a few months after Hillary's "lucky" day in commodities trading, Refco--specifically Hillary's broker Red Bone--was disciplined by the Chicago Mercantile Exchange Board for "serious and repeated violations of record-keeping functions, order-entry procedures, margin requirements and hedge procedures."

One person who has done well during the Clinton years is the man who provided the nexus between Red Bone, Jim Blair, and Bill Clinton.

That man is Don Tyson. During the Clinton-era, Tyson's company benefited from millions of dollars in state loans, tax breaks, and the relaxation of environmental regulations. He received $8 million in tax concessions for plant and workforce concessions, as well as $900,000 in state grant monies to build roads and upgrade sites for a $40 million processing plant in Pine Bluff.*46 What was especially extraordinary, was the kid glove treatment Tyson received from a governor who at least affected a tough and uncompromising stance on protecting the environment.

Before Clinton was elected, the state had reissued a license for a Tyson plant with the proviso that the company had to work out a plan with Green Forest city officials to treat its wastes, tons of chicken feces that the plant dumped into nearby Dry Creek. With Clinton in office, it soon became clear that nothing would have to be done to clean up the plant and save the river. Unfortunately, the runoff of chicken feces ultimately filtered into the town drinking water, sickening local residents and forcing Governor Clinton to declare the locality a disaster area.*47 Tyson was not only an overt financial contributor to the Clintons.

As reported by Time magazine in 1994, allegations of envelopes of cash coming from Tyson's headquarters to the Clintons in the governor's mansion had surfaced by Independent Counsel Donald Smaltz.

These allegations were never pursued, however, because Smaltz's request to widen his probe was shot down by Attorney General Janet Reno.

However murky the background, what is clear is that Hillary and her husband did quite well during their personal decade of greed. But one could not say that they were entirely uncharitable. Journalist Lisa Schiffren learned that Hillary donated to the less fortunate.

Dozens of bags of old clothing she, Chelsea, and Bill had worn were given to charity, and Hillary valued these donations between $1,000 and $2,300 each year for tax deductions. She meticulously listed each item, and gave a value for them, including $10 for Bill's old running shoes and $1 for each pair of Bill's and Chelsea's old underwear.

THE LEADING MAN AND THE ROSE.

A key figure in the Clinton rise to power was a childhood friend of Bill Clinton--and Hillary Rodham's Rose Law partner--Vince Foster.

Before he had been old enough to go to school, Foster played cowboys and Indians with little Billy Blythe in Hope. Later Foster and Thomas "Mack" McLarty III--future president of Arkla (Arkansas Louisiana Gas Company) and White House chief of staff--attended "Miss Mary's kindergarten," as Miss Marie's School for Little Folk was known around Hope, with Bill. Virginia soon moved Bill off to Hot Springs, and the two lost track of each other.

It was Hillary, not Bill, who drew Vince Foster into the Clinton orbit. Hillary and Vince Foster developed a longstanding relationship, complex, intellectual, touched with sparks of romance and intrigue, that would ultimately prove fatal to one of them, and devastating to the other.*48 In the fall of 1976, Foster, handsome and dignified, a graduate of Vanderbilt Law School, chaired the Arkansas Bar a.s.sociation's meeting on legal aid clinics in Northwest Arkansas, where he heard the impa.s.sioned testimony of Hillary Rodham.

Over the course of these Fayetteville meetings that went on and off for several weeks, a deep connection was established. Foster came back from Fayetteville singing the praises of the young law professor, arguing that it was time for Rose to open its door to women and determined that that woman should be Hillary Rodham.*49 This was a big break for a brash, Yankee lawyer who was so new to Arkansas--a woman who once outraged Arkansans by sitting next to her husband at a Razorback game--engrossed in a book. When Foster, with some help from Hubbell, brought Hillary on as an a.s.sociate, it was a move viewed with decidedly nixed sentiments at Rose.

Bill Clinton was well known and intensely disliked by at least one partner. Some partners were Republicans who did not like the growing identification of Rose with Arkansas's one-party state. All shared some apprehension about possible conflicts of interest that could be generated by making the attorney general's wife an a.s.sociate. In many states, this would have been an impediment fatal to Hillary's career. In Arkansas, the attorney general handles criminal cases and acts as a consumer advocate in rate cases before the Public Service Commission.*50 But because Rose was a civil firm that did no utility business, there were no immediate conflicts. Foster and Webb Hubbell pressed the case for Hillary hard so that no partner would stand in their way. The offer was extended.

Concerns about conflicts of interest intensified, however, after she was hired, and it became clear that Bill Clinton was moving further and faster than many expected--becoming the "boy governor" in 1978.

By then, however, Hillary was entrenched, and there was little that could be done. One of the governor's responsibilities was allocating state bond work to law firms. Now, some of the partners saw Hillary as a potential ticket to increased fees.

If greed kept her in her job, fear almost lost it for her, after her husband was defeated in the 1980 gubernatorial election by Frank White, a Republican. Webb Hubbell was asked to persuade Hillary to resign if her husband's defeat cost the firm business, or to make up any potential loss in the state bond business by billing more hours and attracting other clients. Hillary was not the resigning type.

The partners at Rose had been disturbed by something else about Hillary. Her office attire of casual clothes, her utter lack of concern for cosmetics, and her frumpish appearance were not the look Rose Law Firm wanted to show its clients. She had a framed speech on the Equal Rights Amendment from the Congressional Record in her office, a political stance that made some wonder at the likely reaction of Rose's more conservative clients, not to mention partners.

For her part Hillary believed that s.e.xism was pervasive at Rose. A secretary, confided to Hillary that her boss, a partner, said she'd get a raise if she'd wear tight jeans more often.*51 Of course, Hillary's jeans were another matter. One day Hillary was caught by a senior partner wearing jeans to the office, a sight that threw him into a quiet fit.

But there were likely other reasons why Hillary was so controversial.

If the men were traditionalists, the women of Rose were downright catty.

"When Miss Rodham came, she gave me all this personal work," Carolyn Cruce, one former secretary a.s.signed to Foster, told the Tallaha.s.see Democrat in a 1993 interview. "She was very political even then."

One day, when Foster demanded to know why Cruce took so much time to process his work, Cruce told him of Hillary's demands. Foster immediately walked into Hillary's office and ordered her not to heap personal work on his secretary Within a few moments, Rodham came out of her office and ripped into Cruce.*52 A former Rose Law Firm colleague told the New Yorker about Hillary's temper: "It's not so much that she screams--it's more the tone in her voice, the body language, the facial expressions. It's The Wrath of Khan."*53 Hillary gave Cruce the full Wrath treatment. By her account, Cruce responded coolly: "I just looked at her and said, 'Is this what the woman's movement is all about? So a few of you can get ahead and then lord it over the rest of us?'"*54 The continued ascendence of the Clinton family ultimately took the Rose firm on a wild ride. Like so many others who found their fates intertwined with the Clintons, the Rose partners had an opportunity to rise to the very top, even opening a Washington office to take advantage of their solid Clinton connections. Ultimately, however, the Clinton touch dragged them back to the bottom, and the firm was forced to disband.

This was an ironic outcome, for until the 1970s, Rose advertised its character by staying in a drab, nondescript location at Third and State, the message being: In this colorful sea of crooks and characters called Little Rock, we are a bastion of low-key competence and integrity.

The history of Rose reads more like that of a distinguished liberal arts college than a law firm. The oldest law firm west of the Mississippi, Rose was older than Arkansas itself, founded in 1820 by Chester Ashley, a contemporary (and rival) of Stephen F. Austin.

The firm had been renamed for U.M. Rose, a delegate to the Hague Peace Conference, whose likeness stands in Statuary Hall in the U.S.

Capitol.*55 Rose was a hushed place, where young lawyers worked under the watchful gaze of oil portraits. Law degrees from the most prestigious universities were common and several of the older partners had been Rhodes scholars.

Until the early 1970s, Rose had succeeded in keeping itself small and discreet. There were ten partners and six a.s.sociates. Its small size also allowed it to operate in a collegial, democratic manner, one in which the distinctions between partners and a.s.sociates were glossed over. It took a majority vote to make a major decision. It took a unanimous vote to admit a new member.*56 Given its aura of history and discretion, it was a mysterious place, almost sepulchral. In his memoirs, Webb Hubbell described Rose in poetic terms.

"It was as though that big gla.s.s-top table was the tip of some unfathomable iceberg, and as these men sat in their morning meetings in their fine suits and cufflinked shirts, their hands on that cool surface connected them to something very deep and broad and hidden,"

he wrote."*57 He added that any close connection to politics was frowned on.

But Arkansas began to change, and Rose to change with it. The firm grew from sixteen lawyers to fifty-three. The partners moved out of their humble, but historic, office and into a renovated downtown YWCA, an elegant red brick building with hardwood floors and an indoor swimming pool.

Inside the walls of Rose, the older, mannered elders of the firm were entering their emeritus phase. Young bulls had entered the partnership, determined to remake the place in their own image.

Leading them was Joe Giroir, smooth, elegant, cultivated, and tough as nails. He soon became the firm's top rainmaker in the financial services division. In time, he established a separate compensation structure within Rose, one that rewarded those who worked with him on the extremely profitable bond deals. This, in turn, gave Giroir the power to eventually shove aside Rose tradition and egalitarian sensibility to have himself declared the first chairman in the law firm's history.*58 It was Giroir who successfully lobbied the legislature to loosen the state's usury laws and restrictions on bank holding companies.

Giroir soon became less of a lawyer and more of a financial tyc.o.o.n, buying four banks and selling them to a holding company owned by one of the Stephens brothers from Stephens, Inc., the Arkansas banking family, and the billionaire Riady family of Indonesia, owners of the LippoBank of Los Angeles. Giroir, as deal-maker, pocketed tens of millions of dollars, as well as stock in the new holding company, Worthen.*59 When Worthen (and by implication, the Riadys) became a major client of Rose, it did not take long for the money culture to invade the inner workings of the firm.

In time, Giroir would be on the outs with his partners. The Worthen deal went south on a bad loan, costing Giroir himself tens of millions of dollars. Giroir's Worthen partners accused him of taking illegal profits in a stock deal, forcing him off the Worthen board.

It was only a matter of time before the Stephenses cut Rose loose as well.

Giroir was besieged from within. The dual system of rewards at Rose had destroyed the last vestiges of collegiality, sowing widespread resentment. A triumvirate of litigators, Foster-Hubbell-Rodham, forged an alliance with Giroir's lieutenant, William Kennedy III.

When Kennedy--a future Rose chairman--agreed to betray his mentor, the ouster of Giroir was as good as done.

Webb Hubbell, Vince Foster, and Hillary Rodham becane first among equals (under Kennedy), making more deals and cutting more corners than ever before. Of the three, Hillary was the least active at the firm. She was deeply involved in her East Coast causes, managing the perpetual Clinton campaign, and last (and perhaps least) raising Chelsea.

She was not so busy, however, as to be a minor player in the triumvirate. When the tine came for Vince Foster to ask Joe Giroir to give up the t.i.tle of chairman, it was Hillary who bucked Foster up for the task. When a shared secretary had to be fired, Vince left the job to Hillary.

She was equally tough in managing the few cases she had. The legacy of one such case was to dog her for years.

In 1980 Hillary represented one Barbara Joyce, who was planning to relocate to Missouri with her eight-year-old daughter. When Joyce's ex-husband, Larry Nichols, learned of this, Nichols threatened to seek a court order enjoining her from leaving the state.

"I called Hillary and talked to her about it," Joyce said in a sworn deposition in 1994. "And that's when she told me I should leave as soon as possible, which I did." Lisa Caputo, Hillary's press secretary, claimed that the first lady had no memory of the case.

Nichols had been a longtime FOB and had produced Clinton's political ads. Perhaps fearing what he would say in a national campaign, the Clinton machine moved in to discredit him. In 1988 Nichols was fired from his job as marketing director with the Arkansas Development Finance Authority, for using state phones to make calls to Adolfo Calero and other friends in the Nicaragua Contra movement.

In January 1992, according to the tabloid the Star, Larry Nichols tried to achieve his revenge by alleging that while governor, Bill Clinton had used state funds to conduct adulterous affairs with five different women, including Gennifer Flowers. Led by the Star, Flowers became the focal point of media investigations of Clinton's background. It was this journalistic investigation that pushed the Clintons to confess on national television that there had been "pain"

in their marriage in the celebrated 60 Minutes interview that saved their presidential campaign from its first big "bimbo eruption."

THE PROTECTORS.

In her Arkansas years, Hillary drew strength from her friendship with the two mentors who fast became her protectors, Webb Hubbell and Vince Foster. Webb Hubbell had been a young man on a break from his Arkansas bar exam when he first met Bill Clinton and Hillary Rodham.

He claims to have been momentarily spellbound by Clinton's hold on a small group of admirers. He describes his most unusual first impression of Hillary: "Under the wild hair and behind the gla.s.ses, there was something oddly attractive about her. She was quiet, and there was a power in that. At one point she reached over and gently tugged at Bill's sleeve. She didn't look up, didn't implore, she simply tugged at his sleeve as if to say, 'Okay, tine to stop talking and start studying.' In a minute or so, he did just that."*60 Later, a friend explained to Hubbell that Bill Clinton was a Rhodes scholar and Yale law graduate. When he asked who Hillary was, his friend laughed, and said, "The rumor is, she's his brains."*61 Long before the ouster of Giroir, the litigation team of Hubbell, Foster, and Rodham had solidified into a fast friendship, one that would ultimately be dissolved by the death of one and the imprisonment and disgrace of another. The three held a regular lunch together, although in the formal environment of the South both Webb Hubbell and Vince Foster were said to have had to get permission from their wives to be seen in public with another woman. Even then, they went to their lunches at a local greasy spoon, or at an intimate Italian restaurant, usually arriving at one o'clock, after the capital's early lunch hour, to minimize the gossip.*62 Hillary also joined her two comrades at lingerie style shows, ostensibly held so businessmen could select clothes for their wives, in reality so the men could ogle the models. Perhaps this was the beginning of Hubbell's mysterious Victoria's Secret bills. Hillary proved to be a good sport, going along if for no other reason than to make fun of "the Neanderthals" she worked with."*63 Vince Foster and Webb Hubbell had worked together for twenty years, forming a brotherlike bond. But for all their closeness, they were as different as two men could be. Webb Hubbell, appointed mayor of Little Rock and then appointed by Clinton to a brief term as chief justice on the Arkansas Supreme Court, craved the respect and admiration of his fellows no less than Bill Clinton. Now a felon convicted by Kenneth Starr for padding his hours, stealing from Rose and his clients, and cheating on his taxes, Webb Hubbell is remembered in Washington as a disgraced former a.s.sociate attorney general. But in his prime, Webb Hubbell was a Little Rock power player, a man who could, through his powerful father-in-law Seth Ward, open doors to inside deals.

Vince Foster was a vision of the kind of man Hubbell wished to be.

Women noticed Foster. The women on the White House staff later voted Vince Foster the man they would most like to have an affair with.*64 Tall and handsome, his graying hair and austere manner were offset by a crinkly smile and sly twinkle about the eye. Foster was the soul of discretion, a charismatic introvert who could keep a secret and be trusted to carry out critical a.s.signments.

Hubbell projected power through a kind of gregarious, back-slapping amiability. Foster attracted power through gravitas, his personal code of silence and decorum. (Hillary jokingly called him "Vincenzo Fosterini," and he did, in fact, have something of the aura of the cla.s.sic peacetime consigliere from The G.o.dfather.) Lisa Foster was as outgoing as her husband was silent, a voluble woman dedicated to her Catholic faith and more than a little jealous of her husband's close relationship with Hillary Rodham.

When Hillary came to Arkansas, drinking cronies of the Stephens brothers spread the rumor that Hillary was a lesbian. Now another inevitable rumor circulated, that Hillary and Vince spent entirely too much time together, that he had a mysterious way of appearing at her doorstep whenever the governor was out of town, and that she noticeably brightened when Vince came into the room.

If so, who could blame her? Bill Clinton, though scared off from heavy drinking by the alcoholism of his stepfather, had become a nightlife afficionado just like his mother, a fixture of cabarets, honky-tonks, and holes-in-the-wall from Texarkana to the Missouri line. His affairs were the stuff of legend. Rare was the person who had not seen or heard a firsthand account of the governor living it up, surrounded by a bevy of beauties, a girl from a state agency, a former beauty queen, a new television news reporter, or a cabaret singer named Gennifer Flowers.

If Hillary had her fling, people asked, who would blame her? Barbara Walters would later ask Hillary point blank if she and Vince were lovers.

"I miss him very much. And I just wish he could be left in peace, because he was a wonderful man to everyone who knew him."*65 The artful dodge was truly a Clinton trademark; as in other instances it spoke volumes.

L.D. Brown, then a state trooper serving the Clintons, speaks openly of having become a kind of alter ego for Bill, often arranging trysts for the young governor and himself.

He remembers the Fosters and the Clintons going with a third couple to a Chinese restaurant operated by Charlie Yah Lin Trie, now a key figure in the scandal concerning Chinese political donations to the Democratic Party.

"Bill, Hillary, and I had met at a residence near the restaurant where everyone converged for the night out. It would be a night that would demonstrate just how the understanding worked. It would also serve to confirm in no uncertain terms who Hillary's significant other was." Later that evening, Brown says, "Vince and Hillary [looked] like they were in the back seat of a '57 Chevy at a drive-in. Hillary was kissing Vince like I've never seen her kiss Bill, and the same sort of thing was going on with Bill" and the wife of the third couple. "Vince, good looking, tall and suave obviously knew what he was doing, but Hillary looked awkward and unbalanced."*66 Excited by this taste of the forbidden, Brown says the Clintons parted from their friends and made love in the back of their limo while he drove them home.

L.D. Brown's falling out with the Clintons would later lead to t.i.tillating stories of the governor living a frat-boy quest of easy s.e.x, using his troopers as retrievers. It was one such escapade--one that did not involve L.D. Brown--that led to the recruitment by another trooper of a low-level state employee, Paula Jones. It was an encounter that went badly for Bill, and felled a legal domino that caused a train of disasters leading to his impeachment as president.

While Bill Clinton may have the most doc.u.mented s.e.x life in human history, Hillary's personal life is more opaque.

Whether s.e.x was or was not part of the equation is less relevant than what Hillary shared with Vince over the years. Whether or not the story from Charlie Trie's restaurant is true, the Foster-Rodham relationship was surely less carnal than any of a thousand little interludes initiated by Bill. It was not a tryst, but a confidence between people who felt shut out from being themselves by marriage, by the need to make money, and by circ.u.mstances.

In many ways, it was a typical small-town romance, the kind that develops when two people become utterly sick of living in full view of their neighbors. It was a touching side to both of their lives, but one doomed by the dynamics of Washington. In time, Hillary would become FLOTUS--the First Lady of the United States--and Vincent would become her knight-protector as deputy White House counsel.

The terms of their relationship changed. In Washington, Lancelot would not only be under constant attack from without, he would also face stinging criticism from within, often from Guinevere herself.

Of all the people in the Clinton circle, Foster was perhaps the most idealistic, a man with a deep sense of obligation to his friends, a low threshold for public embarra.s.sment, and a brittle ego. He was a good man poorly suited to the challenge of being a defender of the Clintons.

WHITEWATER.

Saul Alinsky wrote of the bishop who "bootlicks and politicks his way up, justifying it with the rationale, 'After I get to be bishop I'll use my office for Christian reformation,' or the businessman who reasons, 'First, I'll make my million and after that I'll go for the real things in life.' Unfortunately one changes in many ways on the road to the bishopric or the first million .... "*67 In the 1992 presidential election, it was former California Governor Jerry Brown who was independent enough, and indiscreet enough, to identify publicly the extent to which upward mobility had changed Hillary Rodham Clinton. He condemned the business practices of Bill Clinton's wife in a debate just before the Illinois and Michigan primaries. "You ought to be ashamed of yourself for jumping on my wife," Clinton shouted back. Clinton won applause for standing up for his wife in a way that Michael Dukakis had failed to do for Kitty. He also made Brown look like a cad. In fact, Brown had performed a public service few in the press, or even the Republican opposition, were willing to do.*68 THE DEAL.

The tangle of deals, blunders, and mutual backscratching called Whitewater would not be understandable without reference to its mastermind Jim McDougal. He is now remembered by most people as he appeared in his last days, when McDougal was rail thin from disease, with a bald Lex Luther dome and a dandyish preference for ice cream-white suits and watch fobs.

In his prime, McDougal was a man to be reckoned with. In a small state like Arkansas, any number of talented and ambitious men can reasonably imagine themselves getting elected to office, perhaps to the highest office in the state, perhaps the land.

There is little doubt that McDougal, who came to know Bill Clinton as a junior campaign volunteer for Senator Fulbright in 1968, shared the younger man's vision of himself as a man destined for greatness. At age twenty, he had been a leader of John F. Kennedy's presidential campaign in Arkansas. He had served on the staffs of two southern giants, Senators J. William Fulbright and John McClellan, and had become an important behind-the-scenes player in Arkansas politics.

McDougal revered FDR, quoted him often, and sprinkled his observations with the great man's witticisms, his quips about Republicans and the president's dog, Fala. He combined a quick mind and a flamboyant temperament with a sense of humor right off the porch of a general store. A recovering alcoholic, McDougal had the personality of a country trial lawyer or a politician.

Politics, however, did not pan out for him. Business was his metier.

Once he reconciled himself to that reality, he devoted his considerable skills of persuasion to making a fortune the Arkansas way: wheeling, dealing, and back scratching. Early in his business career, McDougal had lured Fulbright himself into a partnership in a real estate deal. In the end, practicing business in Arkansas was just another form of politics.

Jim McDougal first met his future wife Susan while teaching a political science cla.s.s in a small college in Arkadelphia.

She was the cla.s.sic southern type, the stylistic opposite of Hillary.

Posing in a television ad, Susan showed off a good figure with a bust that pressed tight against her shirt, wide girlish hips poured into tight shorts, long flowing black hair, and big luscious eyes.

She possessed a demure but coquettish look, an attractive and s.e.xy facade, over a steely ambitious interior.

The McDougals were small-town versions of their more powerful friends, the Clintons. The McDougals had access to money, something Bill and Hillary wanted very much. The Clintons had growing access to power--the ability to ease restrictions, cause a regulator to wink, or keep a sticky matter at the bottom of a state auditor's pile--which would be helpful to the McDougals.

That is how things are done in Arkansas, so it was completely natural that before he became governor, Bill and his wife would meet the McDougals over dinner at the Black-Eyed Pea and decide to do a little land deal together.

McDougal had considerable credibility then as a developer with a green thumb. Bill and Hillary had already made a tidy profit from a previous deal that had included Senator Fulbright. McDougal's description of his new land development as a kind of Ozark Valhalla for the retired set struck a chord in the young politician's acquisitive wife. "Let me tell you this about Bill Clinton,"

McDougal later said. "If you ever tried to discuss finances or anything but politics with Bill, his eyes would glaze over....

Whatever we had to discuss, I discussed it with Hillary."*69 Big dreams were shared among the foursome. They would even set aside plots of their own, a place for the Clintons to go for weekends, perhaps a place to retire when Chelsea was gone to college. McDougal solemnly promised Hillary that there would, in fact, be enough money to send Chelsea to college in style.

The land deal was, of course, White Water Estates. It was 1978 and Bill Clinton was already attorney general. Hillary was just beginning to cash in on various deals. Bill was making only $6,000 a year. But McDougal had plans for how Clinton could help him. So, despite the Clinton's meager finances, McDougal gave them sufficient a.s.surances--and incentives--to get the Clintons to sign up. The Clintons put up no money, co-signing a mortgage note with the Citizen's Bank of Flippen that held them liable for a mortgage of about $200,000.

The plan was simple. Retirees were discovering the Ozarks. A gentle rise overlooking the confluence of the White River and Crooked Creek would be an ideal spot for affluent retirees to live. And, of course, this being Arkansas, many wealthy friends and contributors in Little Rock or Springdale could buy into the property, whether they intended to retire there or not. Having Bill Clinton's name on the deal was a great way to secure the loan for such a bold investment, and a good way to attract customers.

But the devil jumped into the details. Interest rates soared to their highest level since the Civil War. Money was tight during the last Carter years, and southern land values plummeted during the Reagan years. It soon became painfully clear that Whitewater was destined to be largely undeveloped, and what little of it would be developed would become a shabby trailer park.

McDougal, being a man of immense pride, could not bring himself to tell his friend, now the governor, that their real estate had turned into dirt. He depended on Bill for many things. He had even served for a spell as an advisor on "economic development." At the very least, he was supposed to be developing the Clinton family economy, and he was failing at that job.*70 Perhaps to keep his early venture afloat, Jim McDougal went into a far more lucrative business, the savings and loan (S&L) industry. He bought a rural S&L and dubbed it Madison Guaranty. The practices during these heady days of Charles Keating were loose: money could be stashed in anything or anywhere, or given to anyone for any reason.

The magnitude of the malfeasance by the S&L sector would not be apparent until the failure of inst.i.tutions across the South and Vest threatened the liquidity of the entire United States banking system.*71 McDougal supercharged Madison, raising its deposits from $6 million to $123 million within three years.