20 White House Contacts With S&L; Probe Told

White House Counsel Lloyd N. Cutler told a House Whitewater hearing Tuesday that at least a dozen White House aides had more than 20 questionable contacts with federal regulators about their investigation of a failed Arkansas savings and loan owned by an investment partner of then-Gov. Bill Clinton.

But while the aides in some cases displayed poor judgment by conferring with the regulators more frequently than appeared to be proper, they violated no laws or ethical standards, Cutler told the House Banking, Finance and Urban Affairs Committee.

“It would have been better if some of these contacts had never occurred,” Cutler said of the meetings and phone conversations, which took place during a six-month period ending last February as the White House sought to develop a strategy for dealing with burgeoning media reports about the controversy.

Cutler said that “there were too many people having too many discussions about too many sensitive matters.” But at no point was “any effort made to influence” the decision of Treasury Department regulators to seek a criminal investigation into failure of the thrift and its possible connection to the Whitewater resort development, which was partly owned by Clinton and his wife, Hillary Rodham Clinton, in the 1970s.

The “worst” impropriety, Cutler said, was an effort by Bernard Nussbaum, who was then the White House counsel, to persuade Deputy Treasury Secretary Roger Altman to defer a decision to recuse himself from overseeing the Whitewater investigation last February, when the political appointee also was serving as acting head of the Resolution Trust Corp.

Though it did “not violate any ethical standard . . . this discussion should not have taken place,” Cutler said of the Feb. 2 White House meeting.

Nussbaum, who later resigned when word of the White House-Treasury contacts leaked, “should have encouraged Mr. Altman to recuse,” Cutler added.

Cutler’s testimony offered the most detailed public accounting yet of the controversial contacts, which Clinton’s GOP critics contend had a chilling effect on lower-level federal investigators. Those critics contend that the investigators believed that they were being pressured into slowing their investigation of Madison Guaranty Savings & Loan, the failed thrift owned by the Clintons’ Whitewater partner, James B. McDougal.

But in part because of an orchestrated series of leaks from the White House and its allies--aimed at deflecting what could have been several embarrassing revelations by disclosing them beforehand--the hearings offered no major surprises as they opened amid high partisan tension.

Rep. Henry B. Gonzalez (D-Tex.), the committee’s chairman, wasted no time in displaying his distaste for the proceedings by denouncing the “innumerable, inflammatory and absolutely false claims” made by Republican critics of what he scornfully called “the so-called Whitewater affair.”

Rep. Jim Leach of Iowa, the committee’s ranking Republican, conceded that the hearings, whose scope was confined to those aspects of Whitewater that special counsel Robert B. Fiske Jr. has finished investigating, would be no ratings match for “the O.J. Simpson teleprobe.”

But what will emerge, Leach contended, is a picture of “me-generation ethics,” in which the Clinton Administration conspired with congressional Democrats to resist “full disclosure . . . and mislead the public.”

Whitewater, Leach added, is “about the arrogance of power. It is a metaphor for privilege, for a government run by a new political class which takes short cuts to power with end-runs of the law.”

Already chafing under Democratic restrictions that put the meat of the Whitewater controversy off limits for now, the 20 Republicans on the 51-member panel were angered when Gonzalez moved to further limit the scope of the hearings by banning all questions about the suicide a year ago of Deputy White House Counsel Vincent Foster.

Since Fiske has already ruled that Foster’s death was a suicide that had nothing to do with Whitewater, Gonzalez said, “no public good would be served by a hearing on a subject that is clearly closed” and whose airing would only “further torment Mr. Foster’s innocent family.”

In the first of a series of party-line ballots that ruled Republican questions out of order, the committee voted, 31 to 19, to set aside the matter of Foster’s death, leaving only one narrow area of the complicated affair--the White House contacts with the Treasury Department--for the hearings to explore.

Along with a strict five-minute time rule, which Gonzalez appeared to enforce more strictly for Republicans than for Democrats, the restrictions ignited frequent partisan flare-ups.

“This thing smells to high heaven,” complained Rep. Toby Roth (R-Wis.). “If these ground rules applied to the O.J. Simpson trial, you couldn’t ask about the knife, the glove or the blood. Under these ground rules all you could ask is: ‘So, O.J., how was the flight to Chicago?’ ”

But if the increasingly testy partisanship proved to Republicans that the Democrats were trying to frustrate GOP attempts to get to the bottom of Whitewater, it also confirmed for Democrats that the Republicans were bent on turning the hearings into what several charged was a “political circus” to embarrass the President.

Cutler was the opening session’s only witness and the Republicans grilled him for nearly seven hours with hostile questions that, for the most part, were answered so calmly that the partisan tension turned to tedium as the day wore on.

“I find this hearing to be boring,” declared Rep. Maxine Waters (D-Los Angeles) at one point. “Everything I’ve heard here today . . . I already read in the press.”

That was not surprising because for the last two weeks the Clinton Administration and its Democratic allies in Congress have been leaking most of the disclosures that would have come out at the hearings in an effort to avoid the double embarrassment of having Republicans reveal them first.

Aided by friendly questioning from Democrats, Cutler repeatedly testified that no laws or ethical standards were breached by what he described as a series of contacts intended mostly to keep the White House informed of media inquiries about Whitewater and to seek guidance on how to respond to them.

“I found no evidence of any attempt to cover up anything at all,” Cutler said of a review of the contacts he conducted after being appointed in March by Clinton to straighten out the White House’s chaotic handling of Whitewater.

Frustrated Republicans--who are under mounting pressure to produce something at these hearings or drop Whitewater as a political issue--clearly hope to raise more doubts about the Administration’s candor on Thursday, when Nussbaum, who is considered to be a more vulnerable witness, is scheduled to testify.