GOP Balks as Bank Hearing Is Canceled : Politics: Republicans had planned to raise the Whitewater issue. Gonzalez instead calls for a select panel to probe the controversial matter.

Escalating the partisan confrontation over the Whitewater controversy, the chairman of the House Banking, Finance and Urban Affairs Committee Monday abruptly canceled a hearing in which Republican lawmakers had planned to question President Clinton’s connections to a failed Arkansas savings and loan.

But in a surprising twist that appeared to catch Democratic leaders off guard, Rep. Henry B. Gonzalez (D-Tex.) also called for the creation of a select committee to conduct full hearings and to investigate “every aspect” of the tangled Whitewater events.

Some equally surprised Republicans saw Gonzalez’s call for special hearings as a tactic to delay a congressional review--the first phase of which would have been a hearing Thursday. Yet Democratic sources said that the move is likely to reinforce the leadership’s reluctant consensus that Congress sooner or later must conduct its own investigation of allegations that depositors’ funds from the failed Madison Guaranty Savings & Loan were diverted to a real estate venture in which the President and First Lady Hillary Rodham Clinton had an interest.

House leaders had opposed congressional hearings on the grounds that they would interfere with the criminal investigation now being conducted by special counsel Robert B. Fiske Jr. But House Speaker Thomas S. Foley (D-Wash.) told reporters Monday evening that House Democrats hope to reach a compromise with their GOP counterparts on a formula for the hearings.

Foley added that he would be meeting with Minority Leader Robert H. Michel (R-Ill.) today to “work out the conditions on which some hearings might take place” in the near future, provided they do not interfere “with the needs of the special counsel.”

A similar compromise already has been negotiated in the Senate, which voted unanimously last week to recommend that senators take their own look at Whitewater.

No date or forum for the hearings were set but the Senate leadership also will meet this week in an effort to work out details.

Whitewater, meanwhile, seemed to be putting more of a strain on the President during a visit to a seniors’ center in Deerfield Beach, Fla. Responding to a reporter’s inquiry about Whitewater, Clinton said: “My faith that the truth will win out has been sorely tested in the last few weeks. But it’s still there.”

He dismissed a question about whether he is worried that the plea bargain struck by David Hale, an Arkansas banker and former Little Rock municipal judge, would prompt a new round of disclosures about his and his wife’s involvement with the Whitewater real estate project and its ties to Madison.

“This is all a bunch of bull,” Clinton said, shaking his head and appearing frustrated about the Whitewater questions that constantly seem to hound him. “Why don’t you guys let the special counsel do his job?”

Until this week, that was also the question that Democrats on Capitol Hill asked when pressed by their GOP counterparts to agree to Whitewater hearings.

But their concern that such hearings would turn into a political circus, giving the Republicans a platform from which to attack the President, has gradually been overtaken by a conviction that Whitewater could end up overshadowing Clinton’s legislative agenda, threatening health care and other initiatives, unless the Democrats deal with it.

As White House aides are subpoenaed to appear before a federal grand jury, concern is also growing among Democrats that a continuing refusal to hear Whitewater testimony will be perceived as a cover-up.

“We all realize that hearings are going to happen. It’s just a question now of how we are going to do them and when,” said a senior Democratic aide.

Gonzalez sent Foley a letter Monday saying it is “time for Democrats to use the truth, the weapon Republicans fear most” in a “full public airing of every aspect of this matter.”

The Republicans for months have been “using an array of half-truths, old-rumors, half-baked conspiracy theories and outright lies” to malign the President and Mrs. Clinton and public hearings are the best way “to expose the Republican witch hunt for what it is,” Gonzalez said.

However, in a move that immediately provoked more GOP allegations of stonewalling, Gonzalez also canceled the Banking Committee hearing scheduled for Thursday, when Republicans on the panel had hoped to question Clinton Administration officials and others.

Gonzalez’s tirade drew a swift response from Rep. Jim Leach of Iowa, the ranking Republican on the panel, who said that the postponement raises the question of whether “the majority party has the spine to conduct credible oversight of an Administration of the same political party.”

Leach added that information about the scandal that he had planned to unveil at the hearing may now be disclosed in a floor speech that he said he would “probably give sometime this week.”

Times staff writer John M. Broder contributed to this story from Deerfield Beach, Fla.