In her CAFE Note this week, “The Check,” Joyce Vance explored Republican House Oversight Committee Chair James Comer’s quixotic and misguided attempt to drum up a scandal from a loan repayment that President Biden received from his brother in 2018. This is not the first time that a presidential loan controversy has become an arch-partisan flame war. Back in 1996, a loan from a crooked Little Rock banker named David Hale became a political football in the partisan wars surrounding President Bill Clinton.
David Hale was a one-time municipal court judge in Little Rock. In 1979, Hale started a side hustle called Capital Management Services, a Small Business Investment Company (SBIC). SBICs were set up to work in concert with the federal government’s Small Business Administration and were structured primarily to give loans to minority-owned businesses. Taking advantage of Reagan-era deregulations, however, Hale set up a grift; he created dummy companies and loaned money to them, running away with some $3.4 million in government-backed money.
In July 1993, the Department of Justice caught up to Hale. But the fraudster had a powerful card to play. He alleged that in 1986, President Bill Clinton – then Governor of Arkansas – had pressured Hale into giving a $300,000 loan to Susan and Jim McDougal, close friends of the Clintons. The McDougals then sunk $50,000 of the loan into a land deal with the Clintons, with the eventual goal of building vacation homes on the White River in Arkansas’ Ozark Mountains. The loan, like much of Hale’s enterprise, was subsidized by the Small Business Administration under Hale’s legally-dubious rationale.
The contention that the then-Governor had cajoled a corrupt loan shark into giving money to an (ultimately-failed) real estate venture from which Clinton ostensibly stood to benefit obviously didn’t look great. Within a year, Ken Starr – a passionately conservative former Solicitor General in the George H.W. Bush administration – was appointed Special Counsel in the growing controversy, which became known as “Whitewater.” Starr moved toward prosecuting the McDougals for their knowing participation in Hale’s grift. The McDougals, alongside the Hale-linked Arkansas Governor Jim Guy Tucker (Clinton’s successor), were convicted of fraud in May 1996.
During the trial, President Clinton submitted a taped deposition denying that he had ever discussed the loan with Hale or knew anything about the illegal aspects of Hale’s business. Despite Hale’s remonstrances to the contrary – and as with Biden’s role in the current loan controversy, at least so far – no further evidence surfaced suggesting that Clinton had forced Hale’s hand or had broken the law.
Concurrent with Starr’s work, the GOP-controlled Senate Whitewater Committee was winding down almost 14 months of rancorous inter-party debate over the scandal’s significance and moving toward issuing its final report. Committee Chair and New York Republican Senator Alfonse D’Amato was still trying to link Clinton with the Hale loan.
D’Amato tried, at the McDougal trial’s conclusion, to get Hale to testify separately before the legislators. D’Amato and his Republican colleagues were principally concerned with two alleged meetings between Hale and Clinton that had not been explored at the Starr-led trial – one at the Arkansas Governor’s Mansion and the other at a shopping mall in Little Rock.
Hale, concerned over further self-incrimination, asked the Committee for immunity in exchange for his testimony. In what turned out to be the final meeting of the Senate Whitewater Committee, on June 11th, 1996, the Committee voted on whether to grant Hale this desired protection. The result was something of a foregone conclusion; the Democrats on the Committee were firmly united in their belief that the Clinton loan investigation was a witch hunt, and the Democratic votes would be enough to effectively veto the immunity play, which required a two-thirds majority of the Committee to vote in favor.
Committee members issued opening statements anyhow, and the contentious resulting 75 minutes of anguished speechifying – available in full on C-SPAN here – is a master class in finger-pointing and grandstanding that sounds very similar in tone to the current Comer imbroglio.
In short, Democrats argued that providing Hale immunity would be rewarding a criminal, and that he had ample opportunity to tell his side of the story and to provide evidence of Clinton’s alleged involvement in the loan. Republicans countered that the Democrats were covering up for Clinton by opposing Hale’s testimony
Chairman D’Amato jump-started the accusations as he opened the hearing:
It appears that my Democratic colleagues and the White House are afraid to let the American people judge for themselves whether Mr. Hale is telling the truth.
D’Amato also rang a note of partisan fatalism about the foregone conclusion of the looming Hale immunity vote:
I think the American people have a right to these facts and I am not under any illusions as to what the outcome of our vote will be today.
Other Committee Republicans extrapolated on D’Amato’s positioning of Democrats as carrying Clinton’s water, with GOP Alabama Senator Richard Shelby alleging the involvement of the “Arkansas Democratic Machine” in the anti-Hale-immunity Democratic push:
Today is truly an historic day in Washington, Mr. Chairman. Today is the day the Arkansas Democratic Machine blocks the U.S. Senate and the American people from hearing the testimony of David Hale. Today the American people lose and they lose big.
The Committee’s Democrats, meanwhile, zeroed in on Hale’s biography as a reason not to trust his testimony or to give him any legal gifts. Connecticut Senator Chris Dodd, for example, argued that Hale’s background as a municipal judge and prosecutor meant that he understood the benefits of getting immunity – and thus had a motive to keep up the innuendo about Clinton’s involvement in the loan:
You are talking about a former judge in Arkansas, a former prosecutor in Arkansas. He knows very well how to work this system. He is trying to do one of several things. One, he is either trying to weasel out of a potential State prosecution in Arkansas, which is probably what he is up to in this instance; or two, he wants this Committee to give him a license to lie, that’s all.
Massachusetts Senator John Kerry, meanwhile, focused instead on Hale’s supposed crimes – and their disproportionate impact on Black communities in Arkansas. Kerry specifically referenced one particularly unsavory aspect of Hale’s improprieties: A pending Arkansas state case alleging that he had looted an insurance company that sold burial and funeral insurance to some of Arkansas’ poorer residents:
I am not willing to reward a scumbag who has already violated the law and admitted that he is a liar, and let him come up here in front of the Committee and have immunity from the crimes that he has committed, particularly from a State prosecution alleged to have involved ripping off a whole lot of African-American poor folks for an insurance scam. I mean, is that what we ought to do?
Without mentioning Republicans by name, Kerry argued that the GOP members of the Committee were only interested in further dragging Clinton and getting press coverage:
I think people are just upset because they can’t have another media circus, or because they can’t come in here and let this guy come in and do whatever the heck he wants to do.
Kerry’s impassioned statement did not sit well with North Carolina Republican Senator Lauch Faircloth, a conservative firebrand on the Committee who had tried to subpoena First Lady Hillary Clinton over her law firm records, which he believed could shed further light on potential Clinton involvement in nefarious Arkansan business dealings.
Faircloth, who gave his opening statement immediately following Kerry, argued that the Massachusetts Senator’s name-calling of Hale was more of a self-description:
We have referred to [Hale] as a scumbag. I would use that word carefully in view of the adage that birds of a feather flock together.
And, in an oft-repeated, surrealistic Faircloth metaphor, Faircloth argued that the Clinton administration was purposefully withholding evidence about the loan:
David Hale is not the issue. The issue is the same thing we have been going through. And I have said from day one, trying to get information from this Administration, wherever it can be blocked, as I said, is like eating ice cream with a knitting needle or whatever you want to say…
To drive his point home, Faircloth accused the Democrats on the Committee of colluding with Clinton to suppress Hale’s accusations until after Clinton’s November re-election contest against Republican challenger Bob Dole:
What we are doing now is to struggle to try to keep this thing down until November. We don’t want David Hale here testifying because he’ll embarrass the President. We are not rewarding Hale, we are attempting to reward the President by keeping as much as we can under cover until the blessed day of November comes.
Near the end of the speech-making, Illinois Democratic Senator Carol Moseley Braun also used a poetic expression – the 1899 poem “Antigonish” – to position the Hale saga. She pointed the finger back at Faircloth, arguing that Republicans were elevating Hale to the status of an all-important apparition:
There’s been some harsh words this morning and I couldn’t help but think, when one of our colleagues was using words, strong words to describe the opposition of the Minority to a blanket immunity, I couldn’t help but be reminded of a poem that I learned as a child. It went, and I paraphrase: As I was climbing up a stair, I saw a man who wasn’t there, he wasn’t there again today, I wish, I wish he’d go away.
And Moseley Braun suggested that Democrats, rather than trying to get rid of the Hale story, simply didn’t see any evidence that Clinton was implicated in the loan scandal:
Some of the Members of this Committee found no there there. We did not find a man atop the stair. Quite frankly in any event, we are not prepared to give Mr. Hale, which is the specific discussion here today, a get-out-of-jail-free card under the circumstances.
The partisan battle lines were firmly drawn. After the statements, all ten GOP Committee members voted in favor of granting Hale immunity, and all eight Democrats voted against the plan; the push for immunity indeed fell short of the necessary two-thirds majority.
Yet Hale did linger “atop the stair,” even after Clinton’s victory over Dole. In 1998 – in a boon for Democrats – accusations emerged that Hale had taken pay-offs from mega-rich conservative activist Richard Mellon Scaife. In a positive finding for Republicans the following year, however, Starr’s team found no evidence that Scaife or other conservative operators had tampered with Hale’s testimony. Despite the continued volleys from both sides, the story eventually dissolved without further evidence of Clinton’s involvement in the loan.
The Hale loan saga, punctuated by the mutual resentment in the Senate Whitewater Committee’s immunity debate, was evidence of the increasing strategic reliance by legislators on pushing scandal as a means of trying to weaken their opposition. And the Comer loan noise, as Joyce illustrated, appears to be a particularly spurious redux of the Hale playbook.
For more on Whitewater and its significance in shaping subsequent American political life, check out Ken Gormley’s 2010 The Death of American Virtue: Clinton vs. Starr.
And head to my Twitter account for supplemental archival threads on each Time Machine piece: @DavidKurlander.
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