Nussbaum Tells of Calm Reaction to Whitewater

WASHINGTON —  Former White House Counsel Bernard Nussbaum told House investigators Thursday that he thought it was “no big deal” when he learned in late 1993 that President Clinton had been named as a potential witness in a federal investigation of improper savings and loan contributions to one of his Arkansas campaigns for governor.

Nussbaum, who resigned last April because of criticism of his handling of the Whitewater controversy, and 10 current White House employees testified on the second day of Whitewater hearings by the House Banking, Finance and Urban Affairs Committee.

Unlike Lloyd N. Cutler, his successor as White House counsel who testified Tuesday, Nussbaum met with a well-orchestrated Republican barrage of questions pointing up discrepancies in the White House version of events. Republicans were particularly disdainful of Nussbaum’s claim that he initially viewed it as “no big deal.”

Like Cutler, Nussbaum insisted that neither he nor any other presidential aide acted improperly when they learned of Clinton’s possible involvement in the investigation by the Resolution Trust Corp. He emphasized that no one in the Clinton Administration tried to interfere with the investigation.

“That would have been manifestly improper. That did not happen,” said Nussbaum, now a lawyer in private practice in New York.

Nussbaum recalled that he first learned from Treasury officials in September, 1993, that the names of the President and First Lady Hillary Rodham Clinton had been mentioned in a confidential RTC memo to the Justice Department. The memo outlined the evidence in a case involving the failed Madison Guaranty Savings & Loan in Arkansas.

James B. McDougal, owner of Madison, had been a longtime friend and political supporter of the President and a partner with the Clintons in an unsuccessful Ozark Mountains resort venture, Whitewater Development Corp., which they founded in 1978. The Clintons sold their stake in Whitewater to McDougal before entering the White House in 1993.

Nussbaum said that, although he took the news of the RTC memo seriously, he did not panic because he understood that Clinton was mentioned only as a potential witness, not as a target.

“This, very frankly--although in retrospect it’s a great irony--was not such a big deal at this time,” Nussbaum said. “Whitewater was not on the screen . . . . This was not a major crisis or a big deal.”

The comment drew a response from Rep. Bill McCollum (R-Fla.), who noted that, when White House officials responded to the news by alerting the President, they indicated that they had indeed regarded it as a crisis. “The way you reacted--it was a very big deal,” said McCollum, who led the Republican attack on Nussbaum’s testimony.

Nussbaum later admitted that he may have exaggerated when he called it “no big deal.” He acknowledged that in hindsight, it turned out to be “a serious matter.”

Later, the 10 top aides involved in most of the contacts that the White House had with federal regulators all told the committee that they had done nothing to interfere with the progress or direction of the RTC’s investigation. Cutler had told the committee Tuesday that, although many of the contacts were improper, none had violated any laws or ethics rules.

White House aide Thomas (Mack) McLarty, who at the time was Clinton’s chief of staff, echoed that judgment. “It would have been better if some of these contacts had not occurred,” he said, but “nothing happened” as a result of them and “no one in the White House attempted to influence the RTC” in any way.

White House officials uniformly argued that Treasury officials acted properly in notifying the President’s aides that the Clintons were named in the RTC’s so-called criminal referral to the Justice Department. The notification was necessary because the President had to be prepared to respond to anticipated leaks about the referral to the news media, they said.

As Nussbaum explained it, Treasury and White House aides were motivated by a desire to prevent Clinton from suffering a setback that would undermine his ability to perform his officials duties--not by any personal or political concern for him.

White House aide Bruce Lindsey had passed the information along to the President shortly after Treasury Department Counsel Jean Hanson, at a meeting on Sept. 29, 1993, first told White House officials about the criminal referral. Lindsey told the committee that he “briefly mentioned” it to Clinton on Oct. 4.

“I did not suggest, nor did the President ask, that any action be taken and none was,” said Lindsey, a longtime Clinton friend and adviser.

Lindsey said he did not know--and thus did not tell Clinton--that Arkansas Gov. Jim Guy Tucker, Clinton’s successor in Little Rock, also was mentioned in the criminal referral. Republicans criticized Clinton for meeting with Tucker shortly after learning about the referral. Democrats have insisted that Clinton and Tucker never discussed the matter.

McCollum argued that information about the RTC criminal referral should not have been passed along to the President. Nussbaum replied that it is the duty of White House aides to keep the chief executive informed of information that might be the subject of press inquiries.

Republicans were quick to note that Cutler had criticized Nussbaum for urging Deputy Treasury Secretary Roger Altman, then acting head of the RTC, not to disqualify himself from decisions involving the Madison Guaranty inquiry. Cutler told the committee that he believed it was the most questionable action taken by White House aides in response to Whitewater.

Nussbaum, in defending his action, noted that Altman had been advised by the Treasury’s ethics counsel that he was not obligated to disqualify himself from acting in the case, even though he had long been a friend of the President. Nussbaum said government appointees are sometimes too quick to disqualify themselves in instances where there is no conflict.

Nevertheless, the normally feisty Nussbaum admitted humbly that he had made some mistakes during his White House tenure. Among them, he said, was that he should have taken more time to brief the press on these matters. “I was not a perfect counsel,” he said.

He also disagreed with Cutler’s statement that on a scale of 1 to 10, Whitewater is a 2 or 3. He said the Watergate scandal of the Richard Nixon Administration, which he helped to investigate as a House Judiciary Committee aide, was a 10, whereas Whitewater is no more than 0.025.

As Republican questioners repeatedly failed to crack the composure of witnesses, emboldened Democrats at the highly partisan hearings began to ridicule their frustrated GOP colleagues.

The Republicans, Rep. Joseph Kennedy (D-Mass.) said, are just trying to “paralyze the presidency with blatantly partisan and baseless allegations.”

“I think we should start calling this Wastewater,” Rep. Carolyn B. Maloney (D-N.Y.) said.

As the hearings wore on, partisan tempers grew so short that, when a Republican lawmaker refused to stop talking after he had been ruled out of order, Rep. Maxine Waters (D-Los Angeles) yelled across the room to him to “shut up!”