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August 3, 1994 - Part 4
(14:20:36) Even so, earlier this year I recused myself both as Comptroller of the Currency, and as a director of the FDIC from any matter involving the President or Mrs. Clinton in a personal capacity, including Whitewater and Madison, Beyond what any American can read in the newspapers, I have no knowledge of Whitewater or Madison. Despite my lack of involvement in these matters, I have had contacts with the White House or the Treasury relating to Whitewater or Madison on three occasions. I described all three in my memorandum to Mr. Edward Knight, Executive Secretary to the Sec(61) 62 retary of the Treasury, dated March 11, 1994. 1 prepared that memorandum in response to the Grand Jury subpoena to the Treasury Department from the Off- ice of Independent Counsel, Mr. Fiske. Treasury Department has provided a copy of it to the the Committee I am happy to go through these events again with you here today. The first of the three occasions I described in my memorandum involved two Freedom of Information Act requests relating to Madison or Whitewater. Reporters at The Washington Post and The Baltimore Sun submitted these requests to the FDIC. Somebody at the FDIC sent copies of the requests to me. I'm uncertain about who sent them. I think it may have been the Acting Chairman of the FDIC, Skip Hove. These were public documents. Upon receiving copies of the inquiries, I faxed copies to Under secretary of the Treasury, Frank Newman, Treasury, Chief of Staff Josh Steiner, and Bruce Lindsey and David Dreyer in the White House press office, on December 2, 1993. To the best of my recollection, I did this because I thought they might want to know about press interest in these matters. I knew no more than I had read in the newspapers about the matters referred to in the FOIA requests. I never asked anybody to send this material to me. Nobody at the Treasury Department or the White House asked me to send it to them. I never asked about these matters. And, to the best of my recollection, I never discussed these FOIA requests with anybody at the White House or the Treasury, either before or after I sent out the copies. The second occasion occurred during the week between Christmas and New Year's 1993, at the Renaissance Weekend conference. The Renaissance Weekend is a series of symposia and presentations on topics ranging from international relations, economics and business to the arts, Hundreds of people attend. I was sitting in a large seminar listening to a presentation; I think it had something to do with international relations. The President entered the room and sat down near me at the table. Because I know that what happened next is of interest to this Committee, I've tried hard to remember it as accurately as I can. As I recall, the President was reading a newspaper, and we were commenting to each other on and off about the seminar. At one point, the President said something to the effect that he could not understand all the fuss about Whitewater. He expressed the belief he had done nothing wrong, and he indicated he had lost money on the transaction. He then asked me whether I thought I could advise him. I do not recall responding specifically. Our conversation moved on and shortly thereafter, the President left the room. I assumed we would touch base with regard to his question later during the Renaissance Weekend. Our entire exchange relating to Whitewater lasted perhaps 30 seconds.
August 3, 1994 - Part 4
(14:26:10) Let me make two points about the President's question because press reports may have created some confusion. First, my recollection is not that the President asked me to advise him. My recollection is that he asked me whether I thought I could advise him, that is, whether it would be permissible to give him advice. It was clear to me that the President did not expect and did not want me to do anything inappropriate or improper. 63 Second, some press accounts suggest that the President and I remember our conversation differently. I do not remember exactly what he said that gave me this impression, but I understood the President to be asking whether I could properly provide advice related to financial institutions regulation. The President and White House Counsel Cutler have recently said that the President's interest was narrower, that he only wanted names of people who might comment publicly on these matters. That is not what I understood, but it may well have been what the President intended. Our exchange on this point was brief, perhaps 30 seconds. It took place in a noisy room with many distractions. We could easily have miscommunicated. After the seminar, I went back to my hotel room. I was not sure how to followup on the President's question. I had not followed Whitewater closely in the newspapers, and I did not know much about it, Because he is the President, I wanted to be responsive to him. But having practiced law in Washington for 20 years, I understood the importance of being cautious and careful in responding to such an inquiry. I felt I needed some basic information about the subject. I also wanted to get the sense of others about whether it would be appropriate for me to advise the President on this subject. I wanted to give a well-founded and reasoned answer. My first call was to Josh Steiner at the Treasury Department. As best I can recall, I called him just as a starting point-somebody who could point me in the direction of the right people to speak with about these matters. I think I was also trying to figure out how to reach Jean Hanson, the General Counsel of the Treasury Department. My conversation with Mr. Steiner was extremely brief As best I remember, Mr. Steiner just suggested that I speak to Ms. Hanson. I reached Jean Hanson and had another brief conversation. I told her, as I told others I spoke with later, that I did not want information that was not public. I do not remember exactly what Ms. Hanson said, but I understood from her that the Whitewater matter involved a personal loan of the Clintons, I came away with the impression she did not know much about it. I also recall that she seemed to have reservations about the idea of my providing advice to the President. She suggested that I talk to White House Counsel Bernard Nussbaum.
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August 3, 1994 - Part 4
(14:30:34) I tried to call Mr, Nussbaum, but I did not get through. Instead, I got passed along from one person to another in the White House Counsel's Office. I amnot sure I remember all the people I spoke with in this series of phone calls. I know Cliff Sloan has testified that he spoke with me at some point in this series of calls. This is entirely possible, but I do not recall it. I do recall speaking with Bill Kennedy and Joel Klein. In my conversation with Mr. Kennedy, I again sought a general sense of what Whitewater was about and whether I could appropriately advise the President about it. I do not remember getting any new information from Mr. Kennedy. I do recall that lie, too, seemed to have reservations about my advising the President on this subject. Mr. Kennedy recommended that I speak to Joel Klein. I believe Mr. Klein was not available when I first tried to reach him, and that he subsequently called me back. I then learned that 64 he was also attending the Renaissance Weekend. I do not remember clearly whether we finally spoke in person or on the telephone, We were both part of a large informal dinner group that evening, and the conversation could have occurred then, but my best recollection is that we spoke by phone. I do clearly remember that he was very negative about the idea of my advising the President on these matters. Reflecting on the President's question and the reactions of Jean Hanson, Bill Kennedy and Joel Klein, I concluded that I could not appropriately give the President legal or regulatory advice relating to Whitewater. I felt, in the end, that any effort to provide informed advice could lead me into discussions with the President and others that might be inappropriate for me as a regulator and director of the FDIC. The next day, I literally bumped into the President and Mr. Klein in the hallway near a seminar room. Without further discussion, we all agreed that I should not provide advice to the President about these matters. That was the end of it. The President did not ask me to advise him about Whitewater, but rather whether it would be permissible for me to advise him. Upon reflection, within less than a day, we all concluded that I should not. And I did not. Everyone involved, including the President, took great care to avoid any inappropriate actions. No advice was given. No confidential information changed hands. The third occasion on which I recollect contact with a White House or Treasury official regarding Whitewater-aside from occasional passing references in the course of other discussions-was January 19, 1994. 1 was concerned about the steady trickle of news stories about Whitewater. I concluded that I could properly offer the White House one piece of advice drawn from my years of legal practice in Washing-ton: disclose everything. I called Margaret Williams, Hillary Clinton's Chief of Staff, to say just that. I had no way of knowing if anything remained undisclosed at that point. I also told her I thought they should put at least one person to work full-time on the matter, if they had not already done so. I do not recall Ms. Williams saying anything other than "thank you." I did not ask for and we did not exchange any information. There were no follow-up communications.
August 3, 1994 - Part 4
(14:35:55) These three occasions-the faxes, some brief discussions at RenaissaDee Weekend, and a short phone call to Margaret Williamsare the sum andsubstance of my contacts with the Treasury Department and the White House relating to Whitewater and Madison Guaranty. I have done my best to recall them as accurately and completely as I can. I hope my recollections are useful to you. I will be pleased to answer any questions you might have. The CHAIRMAN. Thank you Mr. Ludwig. I want to take up the first item in your statement, these FOIA items that somebody sent you unsolicited. When would that have happened? I don't see a date as to when you got that. You sent them over to the White House Mr. LUDWIG. Late in November---early December, I think it was early December. 65 The CHAIRMAN. And so you got them and then you-you do know you sent them over on December 2nd so Mr. LUDWIG. They would have been received then the same day it was December 2nd, December 1st or December 2nd. The CHAIRMAN. Now, what were these FOIA items? Mr. LUDWIG. These were two press inquiries, Freedom of Infor mation Act requests, sent to the FDIC. As I said in my statement they were public documents. I even checked with our Chief Coun sel, as best I remember, to make certain they were, in fact, public documents. The CHAIRMAN. OK. Now I've got them in front of me and you provided them to the Committee. Actually, the White House provided these to us for our work here. One is a letter from Susan Bear of The Baltimore Sun going to a Doyle Robinson at the FDIC, and the other is a letter on the letterhead of The Washington Post by Susan Schmidt to a Mr. Jack Smith, Deputy Counsel, General Counsel of the FDIC. Now, how often would it have been your practice to get FOIA items and send them on to the White House? Mr. LUDWIG. This was unusual, The CHAIRMAN. Is it the only time it ever happened? Mr. LUDWIG. This is the only time it ever happened. The CHAIRMAN. So this was a unique event? Mr. LUDWIG. This was a unique event. The CHAIRMAN. Why did you feel compelled to do this? Mr. LUDWIG, Well, as I said, Senator, I determined these were public documents. I had nothing to do with Whitewater or Madison. It had never come up The CHAIRMAN. Right.Mr. LUDWIG [continuing], At the board, it had never come up at had nothing to do with them, but they were public documents, it seemed to me that it was appropriate to send them along to people who might have something to do with them. I certainly didn't. So I sent them on. The CHAIRMAN. I guess I'm still curious as to why, in the normal course of events, if there is some reason for these people to have these documents, and I guess we ought to talk about-just describe briefly what these documents cover. Don't read them verbatim, but what are the thrust of these two items? Do you remember? Mr. LUDWIG. I don't have them in front of me, but they're inquiries relating to Madison and Whitewater. The CHAIRMAN. Well, they cover a lot of things, do they not, related to Madison Guaranty, the Rose Law Firm, the FDIC's lawsuit, various other things that's in The Baltimore Sun letter. I guess when I look at this in the context of this general inquiry that we've been assigned to do here, I'm wondering why, when this is not your normal practice, you would take these two documents and send them out to four different individuals. You send one to the Treasury Undersecretary, you send one to the Chief of Staff, so Mr. Newman, Josh Steiner, then Bruce Lindsey and David Dryer in the White House press office. You fanned this out in four directions and I'm just wondering what-you say this was not a common practice. What was your purpose in doing that?