RTC Urges U.S. to Probe Failed Arkansas S

The Resolution Trust Corp. has asked federal prosecutors in Little Rock, Ark., to open a criminal investigation into whether a failed Arkansas savings and loan used depositors’ funds during the mid-1980s to benefit local politicians, including a reelection campaign of then-governor Bill Clinton.

About three weeks ago, the RTC forwarded to U.S. Atty. Paula Casey in Little Rock information about 10 matters arising from transactions at the now-defunct Madison Guaranty Savings & Loan that warrant criminal investigation, according to government sources familiar with the probe.

A written summary of the referral has been sent to the Justice Department, according to sources.

The package includes questions about whether a series of checks written on Madison accounts ended up in Clinton’s campaign fund.

The sources said there is no indication Clinton had personal knowledge of or involvement in the transactions, and the White House said Saturday there would be no way Clinton would have known if money from Madison accounts had been improperly used to make campaign contributions.

The RTC request, based on a broad probe of the S&L;’s financial affairs, also asks for further federal investigation of Madison’s dealings with current Arkansas Gov. Jim Guy Tucker, the sources said.

Tucker’s companies borrowed more than $1 million from the S&L; for real estate and other ventures in the mid-1980s, when he was at a law firm that represented Madison. Some of the loans were made on what appear to be favorable terms and caused large losses to the S&L.; Tucker’s office did not respond to requests for an interview.

The RTC, which disposes of S&Ls;, took over Madison after its 1989 failure, expected to cost taxpayers an estimated $47 million.

In examining the Madison transactions, the RTC has asked Casey to determine whether checks to the Clinton campaign were paid from overdrawn accounts with the authorization of Madison’s owner, James B. McDougal, or whether Madison loans intended for other purposes were used for campaign contributions.