Release Whitewater Papers, Top Clinton Aides Now Say : White House: President appears to be leaning toward disclosure. Criticism of privacy argument is growing.

Senior White House officials have concluded that President Clinton and First Lady Hillary Rodham Clinton must abandon their insistence on withholding documents related to their involvement in the Whitewater real estate project and begin disclosure promptly after the President’s return from Europe, aides said Tuesday.

In a sign that Clinton may be ready to heed his aides’ advice, the President noted, in a televised interview Tuesday night, that he had agreed earlier to cooperate with Justice Department investigators. But “people said that’s not enough, so I think we have to evaluate that and see where we are,” he said.

Clinton made the statement in an interview with Dan Rather on “CBS Evening News,” in which he once again denied any wrongdoing.

Clinton aides, frustrated over the pounding the White House has taken on the issue, also said that they increasingly believe Atty. Gen. Janet Reno should appoint an independent prosecutor to look into allegations about Whitewater and the failure of Madison Guaranty Savings & Loan in Arkansas. Reno has opposed such a move so far, but it has been advocated by a growing number of senior Democrats in Congress.

Mrs. Clinton and members of the senior staff have met several times to discuss the issue in recent days, according to officials who say the First Lady has modified her insistence that the papers are private and should not be released.

“It would be nice to assert privacy and say we don’t have to do this, but there’s a reality here. Nobody wants to see the presidency unravel over this. That’s where it is,” said one senior official when asked about the First Lady’s view of the matter.

Some White House officials continue to argue that Clinton should resist calls to release the papers, saying that the demands are politically motivated and that yielding would weaken him and the prerogatives of the presidency. But that camp appears to have dwindled in recent days as Administration officials have watched steady criticism wear away Clinton’s support within the capital.

In the last three days, for example nine Democratic senators--Daniel Patrick Moynihan of New York, Bill Bradley of New Jersey, Charles S. Robb of Virginia, Bob Kerrey and J. James Exon of Nebraska, Joseph I. Lieberman of Connecticut, Carol Moseley-Braun of Illinois, Tom Harkin of Iowa and Russell D. Feingold of Wisconsin--have said that they favor an independent prosecutor and public release of additional information. Those declarations wiped out an earlier White House policy of portraying all calls for an independent investigation and release of information as motivated by Republican partisanship.

“There is no evidence I have seen or heard about which suggests any wrongdoing on the part of the President or Mrs. Clinton,” Feingold said. “But I do not believe it serves their interests or the interests of the nation to have any sort of shadow or questions about whether an unbiased investigation has been conducted.”

“Whether it is reality or not doesn’t matter--the perception is that the White House is withholding information,” Kerrey told the Associated Press. “This one is not going away, so the way to get it off the table is to get someone independent to take a look at it.”

That perception--that the White House is trying to hide something--has driven a raft of stories about Whitewater ever since the disclosure, shortly before Christmas, that a file relating to the investment had been in the office of White House lawyer Vincent Foster on the day he committed suicide. The file was removed subsequently by White House Counsel Bernard Nussbaum.

After some initial delay, the President agreed to turn over that file and related papers to Justice Department investigators but has refused to make them public. David Kendall, Clinton’s personal lawyer, negotiated with the Justice Department to deliver the documents under a subpoena, a move aimed at preventing leaks.

Whitewater was a real estate development company in which the Clintons invested with a friend, James B. McDougal, and his wife, Susan, in 1979. McDougal owned the Madison Guaranty thrift, which was seized by federal regulators in 1989 at a cost to taxpayers of at least $47.6 million. The real estate deal went sour as well, and the Clintons have said that they lost $68,900.

Republican members of Congress and government investigators have raised questions about whether money from the thrift may have found its way into Whitewater’s coffers. They also have asked whether the thrift may have received favorable treatment from the Arkansas state authorities while Clinton was governor.

Initially, White House officials tried to hold to that position and insisted that any further discussion of the matter was unwarranted. But aides have grown increasingly glum about the ability of Republicans to use Whitewater as a weapon against Clinton--one that could undermine his credibility at precisely the time that he is preparing to launch what promises to be a titanic struggle over health care reform.

White House officials said that they expect to outline the case for disclosure to Clinton when he returns from his European trip. With Mrs. Clinton apparently resigned to the necessity of that position, aides expect it to prevail. But precisely what form the disclosures would take remains unclear.

Some White House officials in recent days have suggested a partial release of Whitewater documents in which some would still be withheld from the public. Many Democratic strategists, however, believe that approach would be futile and potentially dangerous.

Also unclear is how the appointment of an independent prosecutor would be handled. So far, White House officials have taken the position that the decision is entirely up to Reno. Reno, in turn, has argued that she has no reason to appoint an independent prosecutor--that the career prosecutors currently handling the case in the Justice Department are fully capable of acting independently.

Reno has argued that anyone she appoints directly would appear more political than a career prosecutor.

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