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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?
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August 3, 1994 - Part 4
(14:40:53) 66 Mr. LUDWIG. Well, these were public documents. The CHAIRMAN. I understand that, but what was your purpose? Mr. LUDWIG. And as I said, this was a single event in -a very busy day, I didn't have anything to do with Madison or Whitewater, so I wanted to send them off. As best I can recollect, I wanted to make people aware that there was press interest in this matter. That's the best I can recollect, as I said in my statement. The CHAIRMAN. But that was not your common practice? I guess you thought this was a sensitive enough item that once you knew about it you wanted to pass it along. Is that essentially it? Mr. LUDWIG. Well, as I said, it was something that arrived on my desk unsolicited. They were public documents. I certainly had no reason to handle or deal with them, and I wanted to send them along to people who might deal with them or handle them, but it was not something that was a matter that I'd ever come in contact with. The CHAIRMAN. Mr. Steiner's diary entries which were given to us which fall within this time period do not mention, they have no reference-not that they necessarily would--of this item, but I had asked whether they did and apparently they do not. I assume if Mr. Steiner had a reference in his diary to this, he would send it to us. It sounds to me from your chronology as if there was a very quick turnaround when you had this 30-second conversation with the President when he asked if you could properly provide any advice on this matter and you checked around in a hurry and concluded that you could not and should not and then you informed the President of that the next day. Is that the correct summary? Mr. LUDWIG. That's correct, sir. The CHAIRMAN. That's all for me at this point. Senator D'Amato. Senator D'AMATO. Chairman, Mr. Lindsey The CHAIRMAN. Ludwig. Senator D'AMATO. Mr. Ludwig, I'm just looking at this. Excuse me, but why did you send this to Mr. Lindsey at the White House? Mr. LUDWIG. Well, I knew Mr. Lindsey was a Senior Aide at the White I- louse, and so that's why I selected him. I mean, this was a very quick turnaround, and I just sent it to people that I thought might have something to do with it or know who did. Senator D'AMATO. Well, did you know that he was in charge of the-watching the Whitewater situation in particular? Mr. LUDWIG. No, sir, Senator D'AMATO. Why did you think the White House would have an interest in responding to a request, a FOIA request to the FDIC? Mr. LUDWIG. Well, as I said, I knew these were public documents. I knew they had nothing to do with me. I knew from reading the newspaper that Madison and Whitewater were issues of current discussion, and they involved the White House, so I sent them to the White House. Senator D'AMATO. Well, in one of the requests it says-it makes reference to the FDIC's 1989 lawsuit against and subsequent set 67 tlement with Madison accounts, so to that extent, did you ever send them those documents? Mr. LUDWIG. No, absolutely not. The only Senator DAMATO. Would anybody be entitled to that kind of information? I don't know. I mean, the lawsuit documents of 1989, do you know or is that still Mr. LUDWIG. I don't know. I've never seen them. The only documents I've ever seen in relation to this are these two press FOIA inquiries, and that's the only thing I ever passed along. senator D'AMATO. Let me just ask you this. Would I be unfair in characterizing your sending these documents or the request, the request for the documents, your dispersal of them to the White House as saying or characterizing it as a "heads-up'"?
August 3, 1994 - Part 4
(14:45:26) Mr. LUDWIG. Well, sir, I characterized the way I remember it in my statement and that is that I knew there was press interest and I thought it was appropriate to let them know there was press interest since these were public documents. Senator DAMATO. Just one last question. Why did you call Maggie Williams on January 19th to give her your advice and counsel? Why Maggie Williams? Mr. LUDWIG. I had learned I think from either the newspapers or scuttlebutt or somewhere that she was in charge of the Whitewater matter, and that's why I called her. Senator DAMATO. Somehow you got this perception that she was interested or in charge of it. Did you ever speak to her-prior to your call and your advice, did you ever have occasion to speak to her about Whitewater? Mr. LUDWIG. Not that I recollect, I did try to get her to give her this advice on a couple of occasions. That's reflected in my phone logs which I've provided to the Committee, but to the best of my recollection, I've never spoken to her before or since. Senator D'AMATO. OK, thank you. Mr. Chairman, I don't know whether Senator Bond would like to continue on my time or whether it would be better to move over to the other side so he could have a full Senator BOND. Why don't we allow the other side to go forward. Senator DAMATO. I yield back my time. Senator SARBANES. Mr. Ludwig, this kind of call you made to Maggie Williams, was in what, January the 9-when was that call? Mr. LUDWIG. I believe, Senator, it was January 19, 1994. Senator SARBANES. And what prompted you to make it? Mr. LUDWIG. Well, sir, as I said in my statement, reading the newspapers day after day, there was a constant trickle of information about Whitewater. I thought hard about what I could say about this and it seemed to me that what I could say that was perfectly appropriate was that everything ought to be disclosed if it hadn't already been disclosed. I didn't know whether it had already been disclosed, As Secretary Bentsen testified this morning, he evidently spoke with Mr. Stephanopoulos and said the same thing. I felt the same way as Secretary Bentsen. After having practiced law in Washington for 20 years, it seemed to me that in this kind of a matter the best thing to do is disclose and I felt it was appropriate for me to say that. 68 Senator SARBANES. So you felt, given your experience and perceptions, that you might be helpful by calling them and giving them that advice? Mr. LUDWIG. Yes, sir. Senator SARBANES. You say in your statement that was the third occasion of contact Mr. LUDWIG. Yes, sir, Senator SARBANES [continuing]. "Aside from occasional passing references in the course of other discussions, " and I'd like you to elaborate a little bit on what constitutes "occasional passing references in the course of other discussions." What is that phrase intended to encompass? Mr. LUDWIG. Well, sir, you could not, during that period and I think it's true today, meet with anybody whether it's a relative or somebody here in the Congress or in the White House or the Treasury without somebody saying, oh, look, Altman's on the front page or it's Whitewater again or something of that nature. There were not discussions, not a subsequent exchange of nonpublic information--just a word about newspaper or television reports. Senator SARBANES. So that's intended then to refer to those kinds of references and "passing references" in the course of other conversations? Mr. LUDWIG. Yes, sir. Senator SARBANES. I don't need to parse those words very carefully. Mr. LUDWIG. No, sir. Senator SARBANES. So apparently we have testimony from some of the people in the Counsel's Office that they talked to you, but you're not certain that you talked to them; is that right?