What was the Whitewater scandal?

By Bob Schneider AAA
A:

The Whitewater scandal refers to a real estate controversy involving former President Bill Clinton and his wife Hillary. In 1978, when Bill Clinton was attorney general of Arkansas, he and his wife partnered with James and Susan McDougal to purchase 220 acres of land that would become the Whitewater Development Corporation. The real estate venture failed, costing the Clintons a reported $40,000 in losses. James McDougal subsequently entered the banking industry, forming Madison Guaranty Savings and Loan.

In 1986, federal regulators investigated another real estate investment backed by James McDougal. The investigation led to McDougal's resignation from Madison Guaranty and the eventual collapse of the bank. Questions surrounding the Clintons' involvement in the Whitewater deal grew during President Clinton's first term in office and an investigation into the legality of the Whitewater transactions was launched.

The investigation, led by special prosecutor Robert B. Fiske, found that Clinton had pressured David Hale into making a loan that benefited both Bill Clinton and Madison Guaranty. Fiske proceeded to issue a grand jury subpoena to President Clinton and his wife for documents related to Madison Guaranty. While the Clintons initially reported the records as missing, the documents eventually were found and the Clintons were cleared of any wrongdoing.

The investigation continued, with Kenneth Starr at the helm and businessman David Hale as the star witness. Starr alleged that Bill Clinton, during his term as governor of Arkansas, pressured Hale to make an illegal $300,000 federally-backed loan to Susan McDougal. The allegation lost much of its credibility after Hale was convicted of numerous felonies. But the Starr investigation went on to include the Lewinsky sex scandal and several other controversies involving the Clintons. All three inquiries into the Whitewater land deal yielded insufficient evidence to charge the Clintons with criminal conduct. However, several of their associates were convicted as a result the investigations.

(For other high profile scandals, read Eliot Spitzer - Man of a Thousand Scandals.)

This question was answered by Bob Schneider.

RELATED FAQS

  1. How do regulators ensure that markets are conducted at arm's length?

    Learn about arm's length transactions and how the Investment Advisers Act allows stockbrokers to sell securities based on ...
  2. What are key points to a good corporate social responsibility policy?

    Learn the main components of a good corporate social responsibility policy, including communication with stakeholders, partnerships ...
  3. What are some high profile cases of companies who failed to be socially responsible?

    Learn about corporate social responsibility. Explore how Enron's lack of corporate responsibility ultimately destroyed the ...
  4. What are the top trends in corporate social responsibility?

    Learn about top trends in corporate social responsibility. Companies are increasing transparency, innovating, investing locally ...
RELATED TERMS
  1. Computer Crime Insurance

    An insurance policy that provides protection from crimes committed ...
  2. Duty Of Loyalty

    A director's responsibility to act at all times in the best interests ...
  3. Duty Of Care

    One of two primary fiduciary duties of directors, the duty of ...
  4. Adverse Domination

    A legal doctrine that allows regulators to bring litigation against ...
  5. Financial Action Task Force (FATF)

    An intergovernmental organization that designs and promotes policies ...
  6. Kickback

    The payment of something of value to an individual with the goal ...

You May Also Like

Related Articles
  1. Economics

    America's Most Notorious Corporate Criminals

  2. Investing News

    Educating Your Clients About Cybersecurity

  3. Investing News

    How The Patriot Act Works & Why Is It ...

  4. Insurance

    Talk Is Cheap: Campaign Promises And ...

  5. Insurance

    What You Need To Know About Insurance ...

Trading Center