Whitewater Trials and Impeachment of a President: 1994-99

In 1984, federal regulators questioning Madison Guaranty's financial stability and lending practices found insider lending, speculative land deals, and sizable commissions paid to the McDougals and others. That year, the voters returned Clinton to the governor's mansion. And in 1985, to help the governor pay off a $50,000 campaign debt, James McDougal hosted a fund-raiser at Madison Guaranty. He also hired the Rose Law Firm, where Mrs. Clinton was a partner, to do his S&L's legal work.

In 1986 McDougal borrowed $300,000 from a company, owned by former Little Rock judge David Hale, that provided federal money on behalf of the Small Business Administration (SBA). Federal regulators, saying McDougal's practices were improper, had McDougal removed as Madison's president but let him keep the ownership. By 1989, the feds had shut down the S&L. Bailing it out cost American taxpayers $60 million.

In addition, McDougal's mismanagement of a real estate subsidiary of Madison Guaranty brought his indictment on federal fraud charges. He was acquitted in a 1990 trial. Investigations continued, however, and in 1992, when Clinton was running for president, the Federal Resolution Trust Corp. (RTC) told the Justice Department that the Clintons were "potential beneficiaries" of Madison Guaranty's illegal activities.