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. What was the Mahonia company and why did it become the subject of a lawsuit?

    In 1992, J.P.Morgan went into the energy trading business by creating a venture company called Mahonia Limited. At least, ...
  2. What are the dangers of using the Electronic Federal Tax Payment System (EFTPS)?

    The Electronic Federal Tax Payment System (EFTPS) is a convenient way to file your taxes, but you need to be aware of some ...
  3. Can I still pass the CFA Level I if I do poorly in the ethics section?

    You may still pass the Chartered Financial Analysis (CFA) Level I even if you fare poorly in the ethics section, but don't ...
  4. What is an antitrust law?

    Antitrust laws - also referred to as "competition laws" - are statutes developed by the U.S. Government to protect consumers ...
RELATED TERMS
  1. Kickback

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

    The use or production of copyright protected material without ...
  3. Banker Trojan

    A malicious computer program designed to gain access to confidential ...
  4. Net Neutrality

    Network neutrality requires all Internet service providers (ISPs) ...
  5. Net Neutrality

    The idea that all data on the internet should be treated equally ...
  6. Black Market

    Economic activity that takes place outside government-sanctioned ...
comments powered by Disqus
Related Articles
  1. Talk Is Cheap: Campaign Promises And ...
    Insurance

    Talk Is Cheap: Campaign Promises And ...

  2. What You Need To Know About Insurance ...
    Insurance

    What You Need To Know About Insurance ...

  3. Don't Get Sued: 5 Tips To Protect Your ...
    Entrepreneurship

    Don't Get Sued: 5 Tips To Protect Your ...

  4. Are You Trying To Get Sued?!
    Insurance

    Are You Trying To Get Sued?!

  5. What Investors Can Learn From Insider ...
    Markets

    What Investors Can Learn From Insider ...

Trading Center