Clinton Voices 1st Ethics Concerns Over Whitewater

President Clinton on Thursday said for the first time that he is concerned about the appearance of impropriety stemming from meetings between White House and Treasury Department officials on the Whitewater controversy.

The statement came as Treasury’s second-ranking official cut all ties to the continuing investigation of the role of then-Gov. Clinton and his wife, Hillary Rodham Clinton, in the failed Whitewater Development Corp. in Arkansas.

The White House--hearing growing cries of “coverup” from congressional Republicans and others--stepped up damage control efforts to try to keep Whitewater from blowing up into an uncontrolled political problem once again.

Senate Republicans, seeking to keep the issue alive, called for an investigation into the meetings between White House and Treasury officials and threatened to hold up confirmation of the Administration’s choice for a senior banking regulatory position unless hearings are conducted.

As those efforts continued, pressure built on the White House official who has direct responsibility for avoiding ethical lapses--White House Counsel Bernard Nussbaum. Despite widespread speculation inside the White House and on Capitol Hill, officials denied reports that Nussbaum intends to resign, saying that such rumors are premature.

But two officials conceded that Nussbaum has been widely blamed for Clinton’s renewed difficulties. “Nussbaum may be a smart guy,” said one former Administration official familiar with Whitewater issues. “But he’s tone deaf.”

Deputy Treasury Secretary Roger Altman met last month with three White House officials to brief them on a Whitewater-related investigation by the Resolution Trust Corp., of which Altman is the acting director.

Senior Administration officials said Thursday that Altman officially will remain the RTC’s acting director until the end of this month but has now canceled all RTC-related meetings and activities.

Last fall, Treasury officials met twice with White House aides to discuss Whitewater-related matters. Officials at Treasury and the White House insisted that those meetings involved nothing other than efforts to respond to inquiries from reporters.

Thursday afternoon, Treasury Secretary Lloyd Bentsen issued a statement saying that he had ordered Treasury officials to have no further contact with the White House about Whitewater-related issues and had asked the independent Office of Government Ethics to examine the earlier meetings “to ensure that all ethical guidelines were followed.”

The Clintons invested jointly in Whitewater in 1978 with James B. McDougal, who owned Madison Guaranty Savings & Loan. They have said that they lost about $69,000 when the development failed. Special counsel Robert B. Fiske Jr. is investigating the Clintons’ role in the real estate venture, whether funds from Madison--which also failed--might have been used to help pay off Clinton campaign debts.

The Administration containment effort on Thursday started with Clinton, who, in sharp contrast with his recent practice, gave reporters a lengthy answer when asked whether he is concerned about the appearance of improprieties in the case.

“The answer is yes, I’m concerned about that,” he said. “As nearly as I can determine, no one has actually done anything wrong or attempted to improperly influence any government action, but I think it would be better if the meetings and conversations hadn’t occurred.”

Noting the several investigations of Whitewater-related affairs, Clinton said that “it’s very, very important that, while all this is going on, that the activity around it should be handled in such a way as to avoid even the appearance of a conflict. In addition to what the rules are, what I want the people here to understand is never mind what the rules are, bend over backwards to avoid the appearance” of a problem.

Clinton’s remarks were in sharp contrast to earlier statements by him and top aides on Whitewater. Until Thursday, they had brushed aside complaints about appearances, insisting that, because no one has been proven to have engaged in wrongdoing, allegations about appearance problems are politically motivated.

That earlier approach remained at the Justice Department, however, where Atty. Gen. Janet Reno dismissed questions about Associate Atty. Gen. Webster Hubbell, a longtime Clinton friend from Arkansas. The Washington Post reported earlier this week that Hubbell’s former law firm, the Rose Law Firm of Little Rock, Ark., was investigating allegations that Hubbell had overbilled clients. Hubbell has denied any overbilling.

Reno gave Hubbell a strong vote of personal confidence, saying: “I have been extraordinarily impressed with his honesty, his candor, his professionalism and the sacrifices he’s making to serve the American people.

“He advised me that he had not overbilled or done anything wrong. At this point, I have no substantiated information that Mr. Hubbell is doing--has done anything wrong.”

But Reno said that she had not asked anybody in the department to look into the matter. “At this point, all I know is that some unnamed source says that the law firm is looking at allegations of wrongdoing,” Reno said. “All I know from substantiated sources of any kind is that the law firm is reviewing the matter, they’ve asked Web questions, he’s answering the questions, and they’re resolving partnership issues.”

Whether either Hubbell or Treasury officials actually have done anything wrong remains in considerable doubt. In Hubbell’s case, for example, a former senior partner at the Rose firm said Thursday that he knew of no indication of overbilling by Hubbell or of an actual “investigation” by the firm.

Times staff writer Ronald J. Ostrow contributed to this story.