February 29, 1996
Web posted at: 11:40 p.m. EST
WASHINGTON (CNN) -- A new Whitewater report obtained by CNN says there are insufficient grounds for a lawsuit against Hillary Rodham Clinton's former law firm over its work for a failed saving and loan.
Democrats seized on the report, by the Pillsbury, Madison and Sutro law firm to the Federal Deposit Insurance Corp., as they filibustered a Republican demand for an unlimited extension of the Senate Whitewater investigation.
Without a new authorization, the committee cannot function beyond midnight Thursday. Democrats have offered a five-week extension.
The report looked at the relationship between Mrs. Clinton's old employer, the Rose Law Firm, and its client, the failed Madison Guaranty Savings and Loan.
A special prosecutor has been trying to determine whether deposits from two bankrupt Arkansas lending institutions were improperly channeled to the failed Whitewater real estate development, in which the Clintons were partners, and to Clinton's political campaigns.
"There was no substantial evidence that the Rose Law Firm aided and abetted whatever wrongdoing McDougal might have engaged in," the report says.
The law firm of Pillsbury, Madison and Sutro worked first for the Resolution Trust Corp. -- which went out of business on January 1 -- and then for the FDIC. The report concludes that Mrs. Clinton's legal work for the Castle Grande project and a purchase agreement she drafted on behalf of Madison Savings and Loan were not improper. "The circumstances of the work point strongly toward innocent explanations," the report says.
Democratic sources say release of this report comes at a good time for them, as the Republican effort to extend the Senate Whitewater Committee goes to the Senate floor Thursday.
Two Arkansas bankers Thursday pleaded not guilty to charges of bank fraud and conspiracy in connection with their handling of bank funds that went into then-Gov. Bill Clinton's 1990 re-election campaign.
Herby Branscum Jr. and Robert Hill appeared before a federal magistrate in a federal courtroom in Little Rock. The trial was set to begin April first.
Branscum told reporters as he left the courtroom that he was confident he would be exonerated. "We're anxious to get this matter before a jury of Arkansas citizens," Branscum said. "And we feel very confident that when we bring out the truth we'll be acquitted, exonerated and vindicated."
Independent Counsel Kenneth Starr's Whitewater investigation led to eleven-count indictments of Branscum and Hill by a federal grand jury in Little Rock last week.
The indictments say the two men, who own the Perry County Bank in Perryville, Arkansas, attempted to hide withdrawals which were made to the Clinton campaign. The indictments allege that they used phony vouchers to obtain funds which were used as political contributions. They also charge the two men with conspiring to hide the withdrawals from the Internal Revenue Service.
Starr responded curtly Thursday to published reports alleging a conflict of interest on his part in the investigation.
Starr essentially repeated what he said in a written statement earlier, that his ethics advisor, former Watergate Counsel Sam Dash, had advised him it was not a conflict to conduct the Whitewater inquiry while some of the same federal banking officials he was investigating were suing his law firm.
The Resolution Trust Corp. sued Starr's firm for alleged misdeeds in its representation of a failed Colorado Savings and Loan.
![[Imagemap]](/US/images/9601/navbar.gif){kind=small}
Copyright © 1996 Cable News Network, Inc.
ALL RIGHTS RESERVED.
External sites are not endorsed by CNN Interactive.