By the time I became governor again in 1983, McDougal had bought a small savings-and-loan and named it Madison Guaranty Savings and Loan. A few years later, he retained the Rose Law Firm to represent it. When the savings-and-loan crisis hit America, Madison was facing insolvency and sought to inject new cash into the operation by selling preferred stock and forming a subsidiary to provide brokerage services. To do this, McDougal had to get permission from the state securities commissioner, Beverly Bassett Schaffer, whom I had appointed. Beverly was a first-class lawyer, the sister of my friend Woody Bassett, and the wife of Archie Schaffer, Senator Dale Bumpers’ nephew. The Times article was one of a series of articles on Whitewater. The reporter questioned whether there was a conflict in Hillary’s representing an entity regulated by the state. She had personally signed one letter to Commissioner Schaffer explaining the preferred stock proposal. The reporter also implied that Madison had received special treatment in getting its “novel” financing proposals approved and that Schaffer had not exercised appropriate oversight over the institution when it was failing. The facts did not support the accusations and innuendos. First, the financing proposals the commissioner approved were normal for the time, not novel. Second, as soon as an independent audit showed Madison to be insolvent, in 1987, Schaffer pushed federal regulators to shut it down, well before they were willing to do so. Third, Hillary had billed Madison for a grand total of twenty-one hours of legal work at the Rose Law Firm over a two-year period. Fourth, we never borrowed any money from Madison, but we did lose money on the Whitewater investment. That’s the essential Whitewater picture. The New York Times reporter clearly was talking to Sheffield Nelson and other adversaries of mine in Arkansas who would have been happy to create “character problems” in other areas besides the draft and Flowers. In this case, doing so required ignoring inconvenient facts and misrepresenting the record of a dedicated public servant like Schaffer.
The Washington Post weighed in with an article designed to show I’d been too close to the poultry industry and had failed to stop it from spreading the waste from its chicken and hog operations onto farmland. A little animal waste made good fertilizer, but when the volume of waste was too great for the land to absorb, rain washed it into streams, polluting them so that they were unsafe for fishing and swimming. In 1990 the state Department of Pollution Control and Ecology found that more than 90
percent of the streams in northwest Arkansas, where the poultry industry was concentrated, were polluted. We spent several million dollars trying to correct the problem, and two years later, the Pollution Control people said over 50 percent of the streams met the standard for recreational use. I got the industry to agree to a set of “best management practices” to clean up the rest. I was criticized for not mandating an industry cleanup—something easier said than done. The Democratic Congress could not do it; the agricultural interests had enough influence to get themselves completely exempted from federal regulations when Congress passed the Clean Water Act. Poultry was Arkansas’ biggest business and number one employer and very influential in the state legislature. Under the circumstances, I thought we had done a pretty good job, though it was the weakest spot in an otherwise solid environmental record. Both the Washington Post and the New York Times wound up doing articles on the subject, with the Post suggesting by late March that the Rose Law Firm had somehow gotten the state to go easy on the poultry industry.
I tried to keep things in perspective. The press had an obligation to examine the record of someone who might be President. Most reporters knew nothing about Arkansas or me when they started. Some of them had negative preconceptions about a poor, rural state and the people who lived there. I had also been identified as 1992’s “character problem” candidate; that made the media vulnerable to whatever dirt they were handed to support the preconception.
