Why Was There a Whitewater Investigation?

The Mainstream Media's Role

As of mid- September 1998, the OIC investigation of Whitewater which began in January, 1994 is about four years and some eight months old. Yet, the Starr Report to the Congress recommending impeachment of President Clinton mentions Whitewater just twice in over four hundred pages of a summary report. By all indications, the 56-month investigative effort and the expenditure of almost $40 millions dollars has resulted in no evidence of criminal or even unethical behavior by Bill or Hillary Clinton. The Mother Lode of Scandal turned out to be an empty hole!

Who or what triggered the Whitewater investigation ? I would argue it was a disinformation campaign by the Republican Party fully aided and abetted by the Mainstream Media of the United States.

To date, no one has studied the full extent of the Whitewater disinformation effort. It consisted of fabricated stories based upon anonymous leaks from anti-Clinton sources, outright deceptions and lies, and half-truths. The sources of these stories on Whitewater were the two bastions of the Mainstream Media, the Washington Post and the New York Times. The disinformation campaign started on October 31, 1993 with a story from the Washington Post and was active until mid-November. It then died down until mid-December when it came to life again with a big roar and then continued until April 1994. In January 1994, Attorney General Reno appointed a moderate Republican, Robert Fiske to be an independent counsel investigating Whitewater.

Today we have difficulty remembering the intense newspaper coverage leading up to Whitewater because that was about five years ago and we have better things to remember. And by no means did my local newspaper, the San Jose Mercury News, carry all of the stories on Whitewater put out by the New York Times and the Washington Post from late 1993 to early 1994. Yet if we go into the Mercury News archives and ask for a retrieval on stories in the paper on the subject of Whitewater, we get back a rather remarkable result.

In the 113 days from from the December 16, 1993 to April 7, 1994, the Mercury News published no less than 112 separate newspaper stories on Whitewater.

This is NOT counting the same story in the morning and afternoon editions of the paper. Many of these stories contained accusations or were prosecutorial in tone and in content.

An important point to remember is that hundreds of other newspapers throughout the United States were publishing these same stories at the same time.

In short, the massive coverage of the Lewinsky scandal in Mainstream Media beginning in late January of 1998 was not the first time the news pages were filled with a Clinton scandal. Just four years earlier, there were eight Whitewater stories in the last two weeks of December 1993, twenty-four stories in January, fourteen in February, forty in March, and two in the first seven days of April.

DECEMBER 16, 19, 21, 22, 23 (2 stories), 24, 25 = 8 stories

JANUARY 3, 5 (2 stories), 6, 7 (2 stories), 8, 10 (2 stories), 12 (2 stories), 13 (2 stories), 14, 15, 16, 17, 18, 20 (2 stories), 21 (2 stories), 24 (2 stories), = 24 stories

FEBRUARY 2, 3, 4, 7, 9, 10, 17, 18, 24 (2 stories), 25 (2 stories), 26, 28

MARCH 4, 5, 6 (2 stories), 7 (2 stories), 8 (3 stories), 9 (4 stories), 10, 11 (2 stories), 12, 13, 15 (2 stories), 16, 17, 18 (3 stories), 19, 21 (2 stories), 22, 23 (2 stories), 25 (3 stories), 26 (2 stories), 27, 28, 29, 30

APRIL 2, 7

What activity on the part of Clinton could have justified such intense coverage during this time? It was a fourteen-year-old real estate transaction on which the Clintons lost $60,000 dollars.

One of the most remarkable things about all of this is that the Democrats controlled both the House and the Senate of the United States at the time.

Yet the Republicans in Congress controlled the debate, and Republican views were the only views being broadcast via print and TV to all of America. How could this happen?

It happened because the Republicans controlled the Mainstream Media.

And so here we are here today in September 1998 discussing the possible impeachment of a president of the United States.


This was the context of my first letter to the Mercury News on the intensive coverage of Whitewater and the non-coverage of much more blatant indications of criminal activity during the Reagan and Bush administrations.


TO: The San Jose Mercury News ,750 Ridder Park Drive, San Jose, CA, 95190

DATE: April 4, 1994

I am in total agreement with the request of Congressman Leach to examine the Whitewater Affair for evidence of the improper influencing of government regulators, the possible obstruction of justice, and the skimming of money from the Madison Guaranty S&L for political contributions. In addition, however, I believe the congressional hearings should be expanded to a study of the defunct Silverado Banking and Savings and Loan Association of Colorado and the defunct Broward Savings and Loan of Florida.

The Silverado Affair

According to Facts on File, Silverado and Broward cost the American taxpayers about $1 billion dollars and $285 million dollars, respectively. In September 1990, the Federal Deposit Insurance Corporation (FDIC) sued the Silverado Board of Directors for $200 million, charging that they had been negligent in allowing high-risk loans and investments and that the purpose of the loans and investments was to intially fuel the "explosive growth" of the savings and loan and then to subsequently conceal the "full extent of Silverado's financial deterioration. . . ." These high-risk loans allowed the S&L to book high fees and pay huge salaries to its officers. -- $3.2 million dollars to four of its top executives in 1986 alone.

Three of the largest borrowers of Silverado were developers Bill L. Walters, Kenneth M. Good and Larry Mizel. All three had business ties to Neil Bush, a member of the Silverado Board of Directors from 1985 to August 1988. These three individuals also had links to the Houston developer Robert L. Corson or to a man named Herman K. Beebe Sr. Quoting from a Houston Post series that appeared in early 1990 but received little or no attention from the national media, Facts on File said that Corson was identified as "a 'known money launderer' with reputed links to the CIA and organized crime, and Beebe was identified as a "reputed associate of Lousiana Mafia boss Carlos Marcello." Mizel and Good also had close business ties with two Republican politicians from Colorado: Mizel with then U.S. Representative (now Senator) Hank Brown and Good with State Senator Robert Considine (failed 1992 U.S. Senatorial candidate).

Walters: In 1984, before Neil Bush joined the Silverado board of directions, Walters had loaned Bush a sum variously reported as between $1.5 and $1.75 miillion dollars through a bank Walters owned. Between 1985 and 1988, Bush and the other Silverado directors approved loans totaling $106 million dollars to Walters. The Office of Thrift Supervision (OTS) later estimated these loans caused a direct loss to the American taxpayers of $45 million dollars.

Good: Bush had also requested that Silverad to extend a $900,000 line of credit to a joint venture between Kenneth Good and Bush's oil exploration company. The line of credit was approved but not used. In 1984, Good had loaned Bush $100,000 to invest in what Bush later called in Congressional testimony "a 'high-risk' commodities pool." According to his testimony, Bush said the loan did not have to be repaid if, as it later turned out, the investment was unsuccessful. [In other words, he lost all of the $100,000 dollars on the commodities marked.]

Kenneth Good's name popped up again in the list of the 249 Team 100 people who contributed $100,000 each to the 1988 presidential campaign of George Bush. This list appeared in the March/April 1990 issue of Common Cause Magazine. The list also contained the names of Charles Keating and a number of other individuals who were involved with failed S&Ls or S&Ls on the brink of failure. According to Common Cause, many of these contributers "gave their $100,000 at a time when they had significant business or regulatory matters pending with the federal government -- or knew they likely would under the Bush administration"

A Frontline program on political corruption and the S&L mess shown on PBS over a year ago {1993] indicated that a number of the members of Silverado board of directors had also contributed to the Bush campaign and in fact the program showed footage of some of these people at a 1988 political fund-raiser held for Mr Bush in Denver during the campaign. In 1990 Congresswomen Schroeder of Colorado failed in an attempt to get U.S. Attorney General Thornburgh to appoint an independent prosecutor to investigate Neil Bush and Silverado.

In any event, U.S. regulators settled the $200 million dollar lawsuit with the Silverado Board of Directors in early 1991. In the settlement the government received $26.5 million in insurance money, and $23 million from a "legal defense fund amassed by Silverado's directors during the thrift's heyday." Neil Bush received an OTS-recommended cease-and-desist order not to engage in certain financial practices if he became an operating officer of another S&L. Facts on File characterized this administration sanction as "relatively minor." On December 18, 1990 an adminstrative law judge urged that Neil Bush be served with this cease-and-desist order. Facts on File commented: "The recommended sanction was the mildest possible."

In 1992, Michael R. Wise, the former Chairman and CEO of Silverado was indicted by a Federal Grand Jury on three counts of bank fraud having to do with a $1.45 million dollar loan from Silverado's parent corporation, Silverado Financial Corporation. No further details on the indictment were in the Facts on File article.

Questions the Congress and the Media should ask about Silverado:

1. How much income did the Silverado board of directors derive from fees, salaries and bonuses from 1983 to December 1988, when the S&L collapsed? Who were these members of the Silverado board of directors (by name).

2. When did the investigation of Silverado begin and end? When did the first civil (or possibly criminal) violations of the law occur? When was this discovered by the regulators?

3. Specifically, what civil violations were committed during this period of time? Specifically, what criminal violations, if any, were committed during this period of time?

4. What was the range of civil or, if appropriate, criminal penalties available to regulators and to the U.S. Justice Department from the time the investigations first began to the final settlement of the government's case?

5. What political contributions did the members of the Silverado Board of Directors (by name) make during the entire life of the S&L to state or national politicians or political parties? If political contributions were skimmed off from savings and loan earnings during Silverado's heyday, were these contributions not in violation of the law? If political contributions were made to the Bush campaign during, before, or after the on-going investigation of Silverado, were these not in violation of the law? If so, why were there no criminal referrals in either case to the Justice Department?

6. What members (by name) of the various regulatory agencies or the U.S. Justice Department, or the White House were involved in decisions relating to Neil Bush or to Silverado Savings and Loan?

7. It is interesting that four of the largest borrowers from Silverado had links to money laundering and/or organized crime and three of the four had business ties to Neil Bush. What is the role of organized crime in the Silverado Affair?

8. What were or are the relationships between Larry Mizel and the present Senator from Colorado, Hank Brown and Kenneth J. Good and the failed Senatorial candidate Bob Considine?

The Broward Affair

According to Facts on File, an October 13, 1990 article in the New York Times contained the following information on the U.S. government forgiveness of a loan to Jeb Bush and his partner.

In 1985, Jeb Bush and his partner Armando Codina borrowed $4.5 million dollars from the Broward Savings and Loan to purchase an office building. The loan was brokered through a thrift owned by a Bush associate J. Edward Houston.

When the thrift owned by Houston went into receivership in 1987, Bush and Codina were sued by Broward for repayment of the loan. Broward collapsed in 1988 at a cost of $285 million to the taxpayers. That same year, Federal regulators agreed to assume the cost of Broward's bad loans, including the one to the Bush partnership. In 1990, an agreement with Bush and his partner was reached whereby the government forgave the $4.5 million dollar loan for a payment of $505,000. Bush and his partner were allowed to retain the building, which had a mortgage of $7 million dollars.


Questions the Congress or the Media should ask about Broward:

1. Who (by name) were the regulators who originally agreed to assume the cost of the bad loans from Broward? As far as I am aware, the purpose of Federal S&L insurance was to protect the people who deposited their money in Broward S&L, not the people or organizations it loaned money to.

2. In addition to Jeb Bush and his partner, who were the other persons, businesses, organizations whose bad loans were forgiven? For that matter, how much of the $500 billion dollars the Savings and Loan mess has cost the American people was spent on the forgiveness of loans?

3. What were the political affliations of the individuals whose loans were forgiven? Were there any indications of political favoritism by federal regulators in the forgiveness or non-forgiveness of loans owed to failed savings and loans?

4. What elected or appointed government officials (by name) were involved in the final settlement with Jeb Bush and his partner? What were their political affliations?

The Whitewater Affair, the Silverado Affair and the Broward Affair directly relate to important issues raised by Congressman Leach on the floor of the Congress. Did elected or appointed government officials use improper influence in any of these cases? Were government officials improperly influenced? Has the OTS, the Resolution Trust Corporation (RTC), the FDIC or any other government agency displayed political favoritism in the closing down of the various S&Ls and the disposition of their assets? Was money skimmed off from the S&L's for political contributions? What were these contributions intended to buy? These issues should be explored in the Congressional hearings and by the media in the same detail the Whitewater Affair has received during the past two months.

Unfortunately, I do not have access to the information resources of the San Jose Mercury News and the Knight-Ridder chain. All of the above was derived from a reading of Facts on File in my local library, the reading of Common Cause Magazine, and memories of a television program I saw over a year ago. The chronology of Whitewater and Madison Guaranty has appeared in your paper at least five times in the last two months. One has to ask if the intent was to inform or to indoctrinate. The Silverado case in particular is a good analog to Whitewater/Madison in that many of the same factors appear to be present. Of course, Silverado cost the American people about 20 times as much as Madison and has received about 1/20 of the media's attention (or is it 1/200 or 1/2000?). Moreover, as far as I can tell from looking at Facts on File, the forgiveness of loans in the Broward case seemed to have been a one day thing in a single newspaper and never received the attention of the national media (or at least of the American people).

Most people do not realize that newpapers and the other news media pick and choose what is to be reported and how it is to be reported. If a story is of interest, reporters as asked to investigate, to verify facts, and to follow up on leads. At the national level, none of this has appeared to have occurred in the case of Silverado (see the Silverado questions above).

Nationally, and perhaps even locally, the Broward story was almost a non-event. (You might want to check with your Miami paper on this.) One is reminded of George Orwell's 1984 and the post-facto re-writing of news. If Orwell were alive today and living in the United States, he might have added:

But if the news is never allowed to be covered in the first place, then the news event never occurred, and no re-writing needs to take place. Similarly, if only one side of a story is covered, or a story is not put into context, then one has to argue it is not news that is being presented, but an indoctrination to a certain point of view.

Whitewater has received incessant coverage in your paper for almost two months. Facts have been presented in conjunction with innuendo and speculation. But in the larger scheme of things and with all its faults, the coverage Whitewater currently is receiving is exactly the kind of coverage Silverado, Broward, and the other Savings and Loans should have received during the 1980's, and other aspects of the S&L mess should be receiving in the 1990s. What is frustrating is that the media still continues to ignore leads. Among other things, it has failed to ask pointed questions of the RTC. The media is treating this so-called independent agency as if it were some kind of vestal virgin whose feelings are easily hurt. Consider the following:

1. The Frontline program I mentioned earlier also contained an account of the RTC selling an office building to a group of speculators rather than to a public-interest group who were attempting to purchase it for a homeless shelter. As I understand it, this violates the intent of the bailout laws that were passed in the late 1980s and early 1990s.

2. A GAO report of June 10 1991 said that the records of the RTC were often incomplete or unreliable; that it was unable to track all of its assets in receivership or to "provide information related to book value, estimated recovery value, date of sale, sales price and sale gain/loss on an individual asset basis."

3. The same report showed the RTC had been sloppy in background checks on companies hired to help with the bailout effort. In one case it found that the CEO of a contractor was ineligible for RTC work because he was an S&L executive. Another part of the RTC later awarded the contractor (and the same CEO) a $2 million dollar contract .

4. Robert Burns, a developer who had defaulted on $30 million dollars in loans to the Phoenix-based Western Savings Association, one of the four largest S&L failures in the U.S. (the others were Silverado, Lincoln, and Vernon) was reported in the Wall Street Journal on June 12, 1992 as purchasing foreclosed properties from the RTC and selling them to developers at substantial profits.

5. In 1992, the RTC discovered that its General Counsel, Gerald L. Jacobs, had worked as a lawyer for Dicor Incorporated, a Phoenix Arizona development company who had defaulted on loans from the Western Savings Association. (This is spite of the fact that as of June 1992, the Western Savings bailout had cost the American taxpayers $1.7 billion dollars.)

6. Although Madison Guaranty Savings and Loan was declared insolvent in 1987 and taken over at that time by the Government, the interest of the RTC in Madison appeared to die out until 1993 (six years later) when it evidently became an active file. Subsequently, on October 31, 1993, the RTC asked Federal prosecutors in Arkansas to probe Madison. In addition, according to a page 1 story in the April 2, 1994 Mercury News, the RTC had forwarded ten criminal referrals in 1993 to the Justice Department relating to the 1984 Clinton gubernatorial campaign. Yet we were told in earlier Mercury News Whitewater coverage that a member of the Kansas office of the RTC responsible for S&L bailout operations in Arkansa claimed that Federal officials had refused an investigation in 1993 into Madison, the implication being that Clinton officials had stopped such an investigation. I thought stories in the Mercury News were checked with previous stories for consistency and fairness, and that if the previous news accounts were found to be misleading or incorrect, it was mentioned in the current story. Have the rules changed with respect to Whitewater or the Clintons?

7. In 1994, someone in the RTC selected a law firm to examine what civil actions it might take against Madison. Subsequently that law firm appointed a known enemy of the Clinton Administration to take responsibility for that case.

Who are the people in the RTC that have been and are responsible for these things? How much of it is incompetence and how much of it is due to policy-makers appointed during the Reagan-Bush years? No one seems to know or care. But this could be an important news story if some investigative reporting is done.



Getting back to your Whitewater coverage, it is still not too late for the Mercury News to restore balance and objectivity in its reporting. I believe you should continue to cover Whitewater, but, in all fairness, with the following differences:

1. The next time you cover Hilary Clinton and her speculation in commodity futures where she increased a $1000 dollar investment into a $100,000 payoff, you might also want to point out that a large contributor to the Republican Party with ties to organized crime gave Neil Bush, the son of a Vice President of the United States, $100,000 dollars that Bush subsequently lost speculating in the same commodities market. A good investigative reporter would then ask: (1) Why was the gift provided in the first place? (2) What, if anything, did Mr. Good receive in exchange for this "gift" and his subsequent $100,000 contribution to the Bush campaign.

2. The next time you give page 1 coverage to FTC criminal referrals to the 1984 gubernatorial campaign of an Arkansas governor, you might also want to give page 1 coverage to the fact that the directors of an S&L that cost the American people $1 billion dollars in bailout costs contributed to the presidential campaign of George Bush during the very time that the S&L was under federal investigation. Both of these allegations need to be checked for accuracy, but if found to be true, your readers should be told that no criminal referral charges were filed with the Reagan-Bush Justice Department as they evidently have been in the case of Madison with the Clinton Justice Department.

3. The next time you cover the story of the RTC investigation into Madison, you might want to contrast it to the S&L violations charged to Neil Bush, the range of penalties available to the government to punish violations of this kind, and the actual penalty he received. In addition you might want to ask just how a known Republican partisan and an ex-member of the Bush Justice Department was appointed to head the investigation into Madison. Was this happenstance or was it planned? Who was the person in the RTC that selected the law firm? Why did the law firm select that particular lawyer? Did the RTC official know the lawyer? In this connection you might want to review the fact that the law firms hired by U.S. regulators to help the government in recovering losses from failed S&Ls have cost the American taxpayers hundreds of millions of dollars ($177 million dollars in 1989 alone) and that as of February 1990 only 2 per cent of the $16.3 billion dollars known to have been lost through S&L fraud had been recovered. What are the names of the law firms the RTC and its predecessors hired in the past and the RTC is presently hiring? What are their political affiliations? Was there or is there a "revolving door" between the RTC and these law firms?

4. The next time you cover stories involving the FDIC, the OTS,, or the RTC, you might want to ask some of the following questions: Is Gerald L. Jacobs still the General Counsel to the RTC? How did he come to be appointed to the RTC? What are his political affiliations? It is also possible you might want to look into Mr. Robert Burns and find out if he is still buying foreclosed properties from the RTC and selling these properties at a profit. You might also ask what political party Mr. Burns belongs to.

5. The next time you recapitulate the Whitewater story you might want to pay some attention to the number of similarities between Silverado and Whitewater / Madison. After checking the facts on Silverado and possibly following up on the some of the investigative leads I mentioned above (while carefully checking my facts and assertions), you might want to write a retrospective story on Silverado pointing up the similarities and differences. More to the point, you could just list the chronologies of both Silverado and Whitewater/Madison side by side and then let your readers to make their own judgements. Among other things, you may want to obtain a copy of the 1988 video of the Bush fund raiser in Denver so that you can get stills of Neil Bush and some of his former Silverado board members (he resigned from the board when his father was nominated for President). In addition, you might want to obtain Reagan-Bush campaign videos from 1980 and 1984 to see if there are familiar faces in those Denver fund-raisers. You might also want to obtain videos of the 1980,1984, and 1988 fund-raisers in Phoenix, Arizona where a Republican National Committeeman called Charles Keating played a large role. You might also want to determine if John D. Driggs or Gary H. Driggs of Western Savings Association were there.

6. Finally, if you ever do a story comparing the media coverage and investigative reporting on Whitewater / Madison as opposed to Silverado, Broward and Keating's Lincoln S&L, you might want to call it The Minnow and the Sharks: The Great Coverup and Deception.


The Savings and Loan Debacle of the 1980's was an evil thing for which this country will be paying for the next 50 years. The April 2, 1994 issue of the Mercury News contained a page 2 article on Congressman Leach that quoted him as saying

"In a nutshell, Whitewater is about the arrogance of power -- political conflicts of interests that are self-evidently unseemly."

Whitewater should not be allowed to become the icon of the Savings and Loan Debacle, although this appears to be the intention of the national media. The arrogance of power and the political conflicts of interest in the Savings and Loan industry by and for members of the Republican Party never received the attention Whitewater has received this past two months. This is not to say that the Democrats were not involved.

But has anyone noticed, whereas the Reagan-Bush Justice Department went after failed Savings and Loans with known or imputed Democratic connections with all possible force and vigor, those with known Republican connections such as Silverado were treated with kid gloves. The single exception to this appears to be Charles Keating's Lincoln Savings and Loan. The political casualty list for Democratic politicians is long: Cranston is gone, Wright is gone, and Coelho is gone. So be it. But I know of no Republicans that have suffered because of the Savings and Loan Debacle. Senator Jake Garn, co-author of the legislation that let it all happen, and the primary conduit between the Savings and Loan Associations and the Republican Party remains untouched.

One of these days an investigative reporter will prepare a list of the savings and loans that failed during the 1980s and rank them by their cost to the American taxpayer, with Western, Silverado, Lincoln, and Vernon being the top four in this list. Then the investigative reporter will do some research and determine the political affiliations of the Savings and Loans - Republican, Reagan Democrat, Democrat, Could not determine. From these lists and with lots of research, the investigative reporter will then determine what S&Ls were investigated. Finally the investigative reporter will generate a list showing those S&Ls that were determined to have committed civil or criminal violations of the law. I think I know what those two last lists will show. But all of this requires objective investigative reporting and very little of that is being done these days.

The media chose to ignore much of the Republican involvement in the Savings and Loan Debacle during the 1980's and Reagan was rightfully called the "Teflon President." Considering the fact that Republicans own or control almost all of the local and national media, one can understand the curious incuriosity demonstrated time and again during the 1980's and early 1990's and the present avid curiosity and rumor-mongering that went into play even before Clinton took the oath of office.

Is it not time for the editorial members of the Mercury News to say "Enough is enough - let's do some investigative reporting for a change!" Is it not time for the Republican managers and owners of the Mercury News to put their sense of journalism above political expedience and to remember that a free press, an objective press, and above all a fair press are absolutely essential to the American People.

Franklin R. Mancuso

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