Altman Refuses to Step Down Over Whitewater : Probe: Democrats, GOP criticize Treasury official. Bentsen admits that aides made ‘errors in judgment.’

Under intense criticism from Democrats as well as Republicans over the Administration’s handling of the Whitewater controversy, Deputy Treasury Secretary Roger Altman declared Wednesday that he does not intend to resign.

At the same time, Treasury Secretary Lloyd Bentsen acknowledged that his subordinates made “some errors in judgment” that demonstrate the need for changes at the Treasury Department, but he stopped short of saying that he would seek their resignations.

Questions about a possible personnel shake-up at the department came as Bentsen and Altman testified before separate committees during the sixth day of Congress’ inquiry into the propriety of contacts between White House and Treasury officials concerning the investigation of a failed Arkansas savings and loan owned by James B. McDougal, President Clinton’s one-time partner in the Whitewater Development Corp., a real estate project.

After 10 hours of testimony, Altman finished his appearance before the Senate Banking, Housing and Urban Affairs Committee at 2 a.m. EDT Wednesday. At 9:30 a.m., he was called before the House Banking, Finance and Urban Affairs Committee for six more hours of hostile questions about his contacts with the White House on the Madison Guaranty Savings & Loan investigation.

In the Senate, Democrat Richard C. Shelby of Alabama sided with a number of Republicans in calling for Altman’s resignation on grounds that he was involved in improper contacts with the White House and that he then misled Congress about those contacts.

Noting that Altman’s failure to quell criticism has fed speculation that he would be forced to resign, Rep. Marge Roukema (R-N.J.), a member of the House panel, asked him: “What is your thinking on resignation as an attempt to restore your credibility with this committee?”

“I do not intend to do that,” he replied.

But when Bentsen, appearing before the Senate committee, was asked by Sen. Patty Murray (D-Wash.) if he thought that any member of the Treasury staff should be removed, he ducked the question. “Whatever happened here was not done with the intent to harm,” he replied.

At a White House press conference, where questions about Altman’s tenure also were being asked, the President said he regrets it when any Administration official is less than candid with Congress but that he supports Altman, his former college classmate.

“The Secretary of the Treasury has confidence in him and so do I,” Clinton said.

The President also emphasized that he has not been absorbed by the Whitewater hearings. “I’ve watched none of these hearings. I’ve been working on jobs, health care and peace in the Middle East,” he said.

White House Press Secretary Dee Dee Myers said the President is confident that Altman can “rebuild his relationship” with Congress and “can continue to serve and serve well.”

She indicated that Altman will have a series of private meetings with legislators in order to try to smooth things over.

Before he became enmeshed in the Whitewater controversy, Altman--a former Wall Street investment banker--was widely touted as a Treasury secretary-in-waiting--the natural successor to Bentsen when he steps down. But as a result of these events, he no longer appears to be in line for a promotion, and his prospects for continuing in his present job appear uncertain.

Before the hearings, White House Counsel Lloyd N. Cutler indicated that Altman’s future in the Administration would depend on his ability to re-establish his credibility with Congress. But during the House hearing, Rep. Joseph Kennedy (D-Mass.) observed that the criticism of Altman has only grown since the congressional inquiry began.

“What is happening here,” he said to Altman, “is that you are being held out as the fall guy.”

Bentsen, a former chairman of the Senate Finance Committee, was treated gently by most of his questioners. Nevertheless, Sen. Alfonse M. D’Amato (R-N.Y.) got into a finger-wagging shouting match with Bentsen, who sought to minimize the controversial actions of Altman and other Treasury officials.

“You and I have a difference of opinion,” Bentsen shouted at D’Amato at one point.

Altman, who served as acting head of the Resolution Trust Corp. until March 31, has been criticized for misleading Congress about his contacts with the White House and for failing to formally disqualify himself sooner than Feb. 25 from any decision involving the RTC’s investigation of Madison Guaranty.

Like Altman and other Administration witnesses, Bentsen conceded that some of the actions of Administration officials were unfortunate but not illegal or improper.

In addition, the Treasury secretary demonstrated the same Washington savvy that he displayed during his 1988 debate with Dan Quayle when, as the Democratic Party’s vice presidential nominee, he cited his friendship with John F. Kennedy and rejected Quayle’s effort to compare himself to the late President.

“I’ve been in public service for nearly 30 years,” he told the Senate panel. “I’ve seen everything from the McCarthy hearings to Watergate, Iran-Contra, the Church committee, all of it. What you have here is a unique confluence of circumstances that, when you strip away all the rhetoric, resulted in actions that broke no criminal law, did not violate the ethics rules and did not in any way affect the Madison case.”

Bentsen said he met with Altman and Treasury Counsel Jean Hanson on Feb. 1. At that meeting, he recalled, Altman said he was considering disqualifying himself from the Madison Guaranty matter. But Bentsen said he had no recollection of advising Altman to disqualify himself, as Altman has said.

In addition, Bentsen said, he met again with Altman and Hanson on Feb. 23--the day before Altman allegedly gave misleading testimony to Congress about his contacts with the White House concerning Madison Guaranty. But he said he was unaware that Altman had met with White House officials on the subject until Altman talked about it at congressional hearings on Feb. 24.

Appearing before the Senate panel later in the day, W. Neil Eggleston, associate White House counsel, recalled that he was in that committee room on Feb. 24, when Altman said he had met with White House officials about Madison Guaranty on Feb. 2 but did not disclose other such meetings.

Eggleston said he was so disturbed by Altman’s failure to tell the committee that there had been other meetings that he immediately went into the hallway and telephoned White House officials to alert them to the problem.

Several days later, Eggleston said, he called then-White House Counsel Bernard Nussbaum, who was vacationing in Mexico, to discuss Altman’s omission.

Sen. Richard H. Bryan (D-Nev.) said of Altman’s testimony: “Given the most charitable interpretation, it was incomplete and misleading.”

D’Amato criticized Bentsen for failing to advise Altman to disqualify himself. He also criticized Altman for allowing Nussbaum to dissuade him during the Feb. 2 meeting from disqualifying himself.

“He didn’t have the courage to stand up to Bernie Nussbaum,” D’Amato said.

In the House, Rep. Jim Leach (R-Iowa), who has been conducting his own investigation of the Whitewater controversy, said some RTC employees wrote a memo last September objecting to the agency’s recommendation to the Justice Department that the government should pursue criminal charges in the Madison Guaranty case.

It was the first evidence that anyone within the government ever tried to impede the criminal inquiry, which since has been turned over to independent counsel Robert B. Fiske Jr. The RTC is continuing to investigate civil charges involving the failed thrift.

Administration officials have insisted that while some of the contacts between the Treasury Department--which oversees the RTC--and the White House should not have occurred, they were not improper because they did not lead to any effort by the Administration to block the inquiry. But Republicans have long suspected that the contacts were part of a ham-handed effort on the part of the Administration to obstruct the investigation.

“It may be true that criminal referrals were not effectively blocked, but it is not true that an effort to do so was not made,” Leach said. “It is difficult to assess at what levels efforts were precipitated, but it is clear they were coordinated in such a way as to be reported to the top of the RTC.”

Under questioning from the House panel, Hanson admitted that she was aware of the RTC memo objecting to the criminal investigation. But she denied Leach’s suggestion that she assisted in preparing the memo or any effort to frustrate the criminal inquiry.