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August 3, 1994 - Part 1
(10:25:59) The concern was so great that Deputy Chief of Staff Harold Ickes told Chief of Staff Thomas "Mack" McLarty about the difficulties with Altman's testimony the next day. Associate Counsel Neil Eggleston, one of the two White House lawyers who had attended the Senate hearings, called White House Counsel Bernie Nussbaum on vacation in Mexico to alert him to the problem. Now obviously, this thing was not only bubbling, it was boiling. 16 Did any of this ever, in any way during that period between the hearing on February 24th and the last letter on the 21st of the next month, a letter that, by the way, in no way answered the questions that were asked or in no way cleared up things in my humble opinion, did any of this ever, in this boil that was going on at the White House and the Treasury, did any of this ever bubble up to you? Secretary BENTSEN. I do not think it did. The CHAIRMAN. Senator Dodd. OPENING COMMENTS OF SENATOR DODD Senator DODD. Thank you, Mr. Chairman. Mr. Secretary, welcome back to the Committee let me just make one observation, at the outset, and I think it is worthy of noting, because I think it does go to some of the difficulties. Secretary BENTSEN. Let me say to you, Senator, that a lot of things happen over there that do not get to me. Senator DODD. Just one observation that I do not think needs to be made about witnesses' testimony, that I think creates, in a sense, some of the problems we face as a hearing panel. Most of the witnesses have appeared already, before a Grand Jury, have been deposed by the Office of Government Ethics in sworn testimony, have been deposed by Counsel for our Committee in sworn testimony, and some have already appeared before the Committee in sworn testimony. One of the problems that emerges in that process is that witnesses become so trapped by their own statements that the fear of perjury and the advice of counsel of showing any willingness to modify a statement in light of whatever else comes along becomes difficult. I would just make that observation as a general proposition. When a person has testified four or five or six times, I think in a sense we then limit the ability of people to recollect better or to respond to questions, I make that as just a general observation. Second, in response to Senator Gramm's question about the issue of whether or not Mr. Altman would have directed Ms. Hanson to meet with Mr. Nussbaum, or not, I appreciate your response. I think it needs to be framed in the context in which the meeting on September 29th occurred at the White House. It has, I think, been stipulated, or should be stipulated, that that meeting at the White House was to meet on the Waco matter, and that it was at the end of that meeting at which Ms. Hanson talked to Mr. Nussbaum. I think that is a different scenario than the notion of just going down specifically for the purpose, and the fact that someone, in the context of another meeting, might raise the question of their own volition. I think that takes on a different meaning. I would quickly point out that there is a memo that was then sent on the 30th, the day after, in which one could certainly read into that memo that there was some direction. So I am not clear in my own mind as to it, but there is enough of an open question. And 1 am not necessarily soliciting a response from you, but just for the purpose of the record. 17 What I would like to ask you, and I commend you for your testimony, and Senator Gramm has sort of alluded to this already in his question or comment to you and that is what ought we to do in this Committee legislatively. I am deeply concerned about the statutory requirements of how you fill the Chief Executive Officer of the Resolution Trust Corporation when a vacancy occurs.
August 3, 1994 - Part 1
(10:35:22) I think the Secretary's point on that is extremely worthwhile. That jurisdiction may go to the Judiciary Committee. I would hope that someone would make some recommendations on how that might be dealt with as well. Secretary BENTSEN. Senator, that is right on the point and I had made it earlier, and you are amplifying it. That is particularly true for agencies that have some law enforcement responsibility. Senator DODD. Correct, correct. My time has expired. The CHAIRMAN. Thank you. Senator Bond. Senator BOND. Thank you very much, Mr. Chairman. Welcome, Mr. Secretary. Secretary BENTSEN. Thank you. Senator BOND. Just to follow up on a question that Senator Gramm was asking, I know it is very difficult to ask you to make decisions on the veracity of two of your top people. We do have what appears to be an irreconcilable conflict and it is a difficult task for us. But you have outlined to us today a very orderly procedure in which important matters are brought to your attention by means of a memo. 19 Would a discussion with a representative of the White House, like Mr. Nussbaum, by Counsel Jean Hanson from the Treasury or Treasury RTC, under your procedures have been recorded in a written memorandum? Would you expect that kind of information to be put in the record? Secretary BENTSEN. Not necessarily, particularly, Senator where there was nothing for me to do. There was no involvement by me. Senator BOND. Mr. Secretary, you have made it clear in your opening statement and in answers to questions that you told Mr. Altman, prior to February 25, that the judgment was his as to whether he should recuse himself, and that you were in no position to make that decision. The question we have is that Mr. Altman testified yesterday, without any hesitation, that you had recommended that he recuse himself. Secretary BENTSEN. My understanding what he testified to was that he thought I said that if I was in his position, that I would recuse myself. Frankly, I do not remember saying that. I do know that I certainly sympathized with him, and he might have interpreted it to be that. Senator BOND. Mr. Secretary, you were interviewed for the Treasury Department Inspector General's report on July 20th. Two days after you were interviewed, on July 22, the extensive search which you had directed apparently turned up documents reflecting your schedule that your office had just become aware of Those documents reflect that you had a meeting with Roger Altman and Jean Hanson on February 1, the day before the now infamous February 2 White House meeting, but the schedule also reflects that you had a meeting with Mr, Altman and Ms. Hanson on February 3rd, the day after the White House meeting. In your inter-view with the Inspector General, you recall the meeting on February 1st, and you recall discussing the statute of limitations in the Madison civil cases, but you did not recall being advised of the February 2nd meeting. There were no documents at the time reflecting that there had been a meeting two days afterwards, a meeting on February 3rd. With that information now available to you, thinking back when Roger Altman and Jean Hanson met with you on February 2, the day after Secretary BENTSEN. No, they met with me, I think, on February 1. Is that correct? Senator BOND. Well your notes from your office reflect that there was a meeting on February 3, as well. We have a copy of the redacted schedule which shows that there was a meeting on February 3. [Pause.] Pull that out. That shows that Mr. Altman and Ms. Hanson were on your schedule. Unfortunately, we are blessed with no shortage of paper work. This is the 1st, here is the 3rd.
August 3, 1994 - Part 1
(10:30:29) Senator DODD. Now the law required that a confirmed individual assume that responsibility. As of the date when Mr. Casey left, the previous Administration's appointee, there were only two people who had been confirmed by the U.S. Senate that could have assumed that responsibility. One was yourself, as Secretary of the Treasury, and the other was Mr. Altman. Secretary BENTSEN. That is correct. Senator DODD. Now maybe some other Cabinet officer at Labor, but, I mean, I do not know of anyone who is suggesting that that job would go there. Secretary BENTSEN. Right. Senator DODD. So I wonder if you might share with us what should be done. I realize that it is right for you to indicate you would like to think about this, and I asked Mr. Altman yesterday and the Treasury might send some recommendations to this Committee. One of the constructive things we might do is address that piece, I guess it was FIRREA, as to how we might modify the law and avoid the kind of inherent Catch- 22 situation that led to a lot of the problems that have resulted in these hearings and the questions that have been raised. I would ask you this morning if you might just comment generally on that particular legislative or statutory mess we have ourselves created. Secretary BENTSEN. Let me do that, Senator. Let me also supplement the answer to Senator Gramm insofar as those things taking place within the White House that involved answers on the RTC. I had built a wall to be sure that I did not get involved in those things. The legal interpretation of the responsibility of the Chairman of the Oversight Board is that you not intervene in case specifics, and I wanted to be sure that that did not happen to me. Now to get to your point, Senator, you are absolutely right. As we interpreted the law, it had to be someone who was a Presidential appointee who had been confirmed by the Senate. And logic was that you tried to use someone that had a background in finance, and there were only two of us in that capacity, that had been confirmed by the Senate. And that was myself and Deputy Secretary Altman. He had a background in finance. He had a background in management. And I asked him to do that, to take that position. No one really wanted that job. Senator DODD. In fact, you could have left it vacant, I suppose, but I am not sure that would have been a responsible decision. Secretary BENTSEN. Well I do not see how we-we had to have somebody over there in charge. And so he took it. 18 And that was under the Vacancy Act. And it really should be amended. I think both you and Senator Gramm have made the point that that should not happen again. I think you are right on that, and we will work on legislation we would recommend to you for your consideration to see it does not happen again. Now we did get an amendment in there, as I recall, on the Resolution Trust legislation that provided for a deputy in that situation. Senator DODD. That is correct. The Chairman has informed me of this, and I think it is called for under the Completion Act of 1993. Some of this may have been already addressed, and so I appreciate your response and I appreciate the Chairman's pointing that out that some of this has already apparently been addressed, but you made another point which I think also is worth noting, There is a piece in The Washington Post this morning written by Lloyd Cutler entitled "A Heads Up History." Mr. Chairman, I might just ask unanimous consent that that be included in the record. [No response.] The CHAIRMAN. Without objection, so ordered. Senator DODD. Because I think the Secretary has pointed to another problem here that we have identified in a referral from the RTC in this matter, and that is at what point is a legitimate government function triggered that conversations between people of different agencies can talk to one another. Today, we are discussing the Resolution Trust Corporation, the Treasury and the White House, but there are referrals made from, virtually every other Cabinet agency to the Justice Department. There are circumstances completely different from the ones we are talking about here that would need to have some sort of clarification as to how you draw that white line.
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August 3, 1994 - Part 1
(10:40:52) If someone could hand this to the Secretary? [Pause.] 20 This redacted schedule suggests that on Thursday, February 3, at 11:50, Roger Altman and Jean Hanson met with you. Do you have any recollection, or does that freshen your memory as to what might have happened at that occasion? Secretary BENTSEN. No, it does not, Senator. I have shown you something of my meetings, my schedules, and it does not. Senator BOND. Thank you. I can understand that meetings that long ago may not come quickly back to mind, even when you had a busy schedule. But speaking of the Inspector General and the OGE report, there is something that concerned me. Last night, we learned that Mr. Altman read and used the transcript of the IG's interview in preparation for his testimony, and also that Mr. Cutler had been presented copies, more than a week or so ago, of these IG reports. Do you know why these transcripts were released to the witnesses before they were called to testify before this Committee? Secretary BENTSEN. Yes, I certainly do. In the sworn depositions that were sent to Mr. Cutler, he had asked for those to help him in his preparation before the Congress in his testimony. He had a very short time span in which to accomplish that, And I thought that he deserved that to be able to do a good job of it, and that the Congress deserved that kind of information. So it is also, let me state, someone here said that these things are a bit like a trial hearing. I am no trial lawyer so I am no authority in that regard. But it is my understanding that once you have these sworn depositions, that they can then be exchanged and others can look at it, with the idea of giving the more complete facts as to what happened. It is not something that is kept in secret, it is not something that is sprung a surprise, a gotcha; it is more informational. And that is what we were trying to do. Now let me say, further, that I asked the IG about the propriety of it to be sure of that regard. And it was also my understanding that he thought he had completed his questioning of witnesses, and that after he had done this, that then the Office of Government Ethics then asked for one more witness to be deposed, and that was done. And that was the Comptroller of the Currency, Gene Ludwig. And that that did not impinge on the other witnesses' depositions. Senator BOND. Mr. Chairman, my time is up. I thank the Secretary. I was under the impression that the IG interviews were to be kept confidential until they were all released at once. Even though this is not a trial, we all know that if memories are shaky, or if in the instance where there is perhaps something that needs to be dealt with, having access to somebody else's testimony before you give your testimony may enable you to tailor the facts. So that is a little troubling to me.
August 3, 1994 - Part 2
(11:00:02)(tape #10077 begins) (11:03:12)(tape #10076 ends) (11:11:42) Hearing resumes: The CHAIRMAN. The Committee will resume. I want to say for the record that Senator Sasser was in the middle of his time period-well he has just returned. Let me just give Senator Sasser a minute to get seated and get his materials ready. If the timing clerk would restore the remainder of Senator Sasser's time after he has caught his breath here, we will go ahead and finish with Senator Sasser and then we will rotate over to the Republican side. Senator Sasser. Senator SASSER. Thank you, Mr. Chairman. Mr. Secretary, I am fascinated by the statement that you made to George Stephanopoulos arguing in favor of "lancing this boil." Some of the things you learn just by living, and I think sometimes if you are a smart person and have an open mind you will acquire wisdom over the years. This may have been a very wise suggestion that you made to George Stephanopoulos. I think it was. But my question comes: How would you lance this boil? I was talking to a very prominent constituent of mine last evening who unfortunately for him is a C-SPAN junkie. He watches everything we do on television here, and he was making the point. He says, this reminds me of "The Dance of the Seven Veils." After the last-the veils are taken off one after another, and finally to our chagrin we find when the last veil falls there is nothing there. Now my question to you is: How do you lance this boil here that has been pestering this White House, and has been in and out of the news now for 2 years? The CHAIRMAN. The Committee will resume. I want to say for the record that Senator Sasser was in the middle of his time period-well he has just returned. Let me just give Senator Sasser a minute to get seated and get his materials ready. If the timing clerk would restore the remainder of Senator Sasser's time after he has caught his breath here, we will go ahead and finish with Senator Sasser and then we will rotate over to the Republican side. Senator Sasser. Senator SASSER. Thank you, Mr. Chairman. Mr. Secretary, I am fascinated by the statement that you made to George Stephanopoulos arguing in favor of "lancing this boil." Some of the things you learn just by living, and I think sometimes if you are a smart person and have an open mind you will acquire wisdom over the years. This may have been a very wise suggestion that you made to George Stephanopoulos. I think it was. But my question comes: How would you lance this boil? I was talking to a very prominent constituent of mine last evening who unfortunately for him is a C-SPAN junkie. He watches everything we do on television here, and he was making the point. He says, this reminds me of "The Dance of the Seven Veils." After the last-the veils are taken off one after another, and finally to our chagrin we find when the last veil falls there is nothing there. Now my question to you is: How do you lance this boil here that has been pestering this White House, and has been in and out of the news now for 2 years?
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