Death of American Virtue - Ken Gormley [29]
Dear Jim,
I enclose the proxy statement. When did you change the name of the Bank? My shares are Bank of Kingston!
Your statement is remarkable, assuming those loans of over $4 million are sound! Which of course I do assume.…
I am sorry to hear about the gout. I understand it can be very painful and may make you grumpy, which of course may be appropriate for a banker.
Susan recalled, with a faint smile on her face, “We went into Kingston, and we painted every building in the city. For free. We would go to [businesses] and say, ‘Would you like [us] to paint your building?’ We had an elephant that came to the opening. We had a hot-air balloon. For the people. For the people there, because Jim loved them.… He was P. T. Barnum. Really.”
Jim felt passionately about this and every other high-soaring project. “He wept over the president of the bank retiring and gave this beautiful speech about this man having given his life,” recalled Susan. For Jim McDougal, the American way was a thing of beauty. He had grown up watching his parents, Leo and Lorene McDougal, loan money to good and honest folks in their little general store, being “paid back with love and respect.” As Susan would say gently of the husband who later divorced her, who testified in a fashion that convicted both of them at trial, and who died in prison owing millions of dollars to the feds: “There was a side of Jim that only a few of us really knew, that was the epitome of all goodness.”
Claudia Riley would add, as an impartial observer who knew Jim McDougal as well as any other person in the world: “Jim did not give a damn about making money. It was the quest. It was the game. It was the play.”
IN its first year, Madison Bank’s assets more than doubled, soaring from $1.5 million to $3.6 million. With interest rates rising and certificates of deposit earning 15 percent interest, ordinary customers and farmers were socking away money into CDs. Hippies growing marijuana in the Ozark Mountains were investing bundles in the bank. Yet these new economic forces were also wreaking havoc on Whitewater. Renovations and marketing gimmicks at the bank in Kingston had gobbled up any profits on the Whitewater venture. The loan McDougal had finagled to make the down payment for Whitewater was coming due. So he solved the problem by borrowing funds from other sources. Susan McDougal explained that Jim was “too ashamed to admit that it didn’t work. We had to keep taking our personal funds and propping it up.” Hillary Rodham Clinton would later tell Resolution Trust Corporation (RTC) investigators, in sworn statements signed in 1995, that the Whitewater project seemed to click along smoothly and that Jim McDougal gave every indication that it was a booming success. She told the investigators: “There were many years in which the McDougals did not ask for a contribution.… We expected the project to be essentially self-financing when the requisite number of lots had been sold.”
In an effort to spur sales even further, Jim McDougal encouraged Hillary to finance a two-bedroom, prefab “model home” on the Whitewater property, for a mere $28,000. Her credit was rock solid; she was a successful lawyer at the Rose Law Firm. Chelsea Clinton had been born in February 1980—McDougal reminded Hillary that “Whitewater will pay for Chelsea’s college.” With this incentive, “Hillary’s house” was built on empty land, further entwining the Clintons in the project. As Mrs. Clinton would later explain to the RTC investigators: “McDougal believed that the placement of a model home on one of the lots would be helpful to the marketing of the project.… I expected Lot 13, for which I became owner of record, to be sold quickly.”
When Bill Clinton lost his first bid for reelection as governor in the 1980 election—getting trounced by Republican Frank White—the Clintons suddenly needed cash, as Bill prepared to launch a bid to reclaim his office. McDougal’s own debt, meanwhile, was skyrocketing.