Then consider the Whitewater investment. Forget for a minute about all the scandal associated with the word and the convoluted financing arrangements. Look at it for a minute as a pure investment—the biggest business venture that the Clintons had ever been involved in prior to the presidency.
Back in 1978, Bill Clinton was a popular Arkansas attorney general running for governor. He was campaigning as a reformer, an advocate of “consumer protection” and “rights for the elderly.” Like Hillary, he was concerned about unscrupulous “private corporations.” And as he has so often done in his public career, he made a point of claiming the moral high ground over his opponent.
An old friend and political operative, Jim McDougall, came to Bill and Hillary with an investment idea. He wanted to purchase 230 acres of land situated along the White River in the Ozark Mountains of north Arkansas and subdivide it to sell lots as vacation sites. McDougall promised huge returns, on the order of 20 percent a year. The Clintons thought it sounded like a great plan. Hillary in particular had high hopes for the property.
While publicly criticizing Ronald Reagan’s tax cuts, she wrote McDougall in 1981: “If Reaganomics works at all, Whitewater could become the western hemisphere’s Mecca.”
The Clintons put no money into the investment. But Hillary, as an attorney in private practice, played an important role in establishing and running the venture. And what a venture it was meant to be. Whitewater was not designed as a regular real estate company.
The plan was to sell lots, mainly to elderly retirees and middle-class families, by advertising in small-town newspapers. (They advertised several times in Mother Earth News.) Ordinarily, of course, when you buy a piece of land and finance the purchase, you receive a copy of the deed. If you start missing payments and can’t work things out with the finance company, they will eventually repossess the property. After paying off fees and debts, you will get back any remaining equity.
But the Clintons and McDougall did things differently. When customers wanted to buy a lot, they signed a simple purchase agreement. But this was no ordinary real estate contract. The small print at the bottom read: “In the event the default continues for 30 days … payments made by the purchaser shall be considered as rent for the use of the premises.” In other words, the buyers did not actually take ownership of their property until the final payment was made. If a buyer missed just one monthly payment, all their previous payments would be classified as rent and they would have no equity in the land at all.
This sort of contract was illegal in many other states, because it was considered exploitative of the poor and uneducated!’
One look at the experience of those who bought into Whitewater and you can see why.
Clyde Soapes was a grain-elevator operator from Texas who heard about the lots in early 1980 and jumped at the chance to invest. He put $3,000 down and began making payments of $244.69 per month. He made thirty-five payments in all—totaling $11,564.15, just short of the $14,000 price for the lot. Then he suddenly fell ill with diabetes and missed a payment, then two. The Clintons informed him that he had lost the land and all of his money. There was no court proceeding or compensation. Months later they resold his property to a couple from Nevada for $16,500. After they too missed a payment, the Clintons resold it yet again.
Soapes and the couple from Nevada were not alone. More than half of the people who bought lots in Whitewater—teachers, farmers, laborers, and retirees—made payments, missed one or two, and then lost their land without getting a dime of their equity back. According to Whitewater records, at least sixteen different buyers paid more than $50,000 and never received a property deed. The Clintons continued this approach up until the 1992 election, when they tried to quietly get out of the investment.
I say “the Clintons” did these things because Hillary was at the center of it all. Monthly payment checks were sent to the Whitewater Development Corporation in care of Hillary Rodham Clinton. In 1982, Hillary herself sold a home to Hillman Logan, who went bankrupt and then died. She took possession of the home and resold it to another buyer for $20,000. No one was compensated (and she didn’t report the sale on her tax return).
Hillary has always very indignantly maintained that she and her husband “did nothing wrong” with regard to Whitewater. After all, they lost money in the deal. But they have always avoided discussions about how the business was structured, and how it exploited the very people they have often professed to help.
In the meantime, Sen. Hillary Clinton has gone on to champion the cause of going after banks and other lenders for “predatory mortgage lending practices.” In an amazing feat of moral dexterity, she cosponsored the Predatory Consumer Lending Act, claiming that mortgage fees are too high. (No, the law does not outlaw the type of financing scheme she was involved in).
Just bear this in mind when you hear Hillary shedding her crocodile tears about predatory lenders and unfair mortgage foreclosures — or even “slumlords.”