Living History by Unknown (best non fiction books of all time .txt) 📕

clerked on the Supreme Court for Justice Byron White and had experience in corporate law and in cases involving the media. He had represented clients in several S&L investigations in the 1980s, so he was familiar with S&L

issues. At the same time, he had an unwavering social conscience. On his office wall hangs a copy of his arrest record in Mississippi, where he had been jailed briefly as a civil rights activist during the voting rights drive in Freedom Summer in 1964. In one of his first jobs as an attorney, he defended death penalty cases for the NAACP Legal Defense Fund.

Like all really good lawyers, David has the talent to transform seemingly random and disconnected facts into a persuasive narrative. But reconstructing the story of Whitewater would test his skills. First, David took over the files from Vince Foster’s office, which had been turned over to Bob Barnett after Vince’s death. Then he tracked down other documents from Washington to Flippin, Arkansas, near the Whitewater property.

David met with us in the White House every week or so for the next three months. As I listened with fascination, he filled us in on what he had learned while piecing together gaps in the Whitewater record and tracing Jim McDougal’s increasingly bizarre investments.

Trying to re-create McDougal’s paper trail, he said, was like shoveling smoke.

Neither Bill nor I had ever visited the Whitewater property; we had only seen photographs.

David decided that he needed to see the place “in three dimensions and in real time” in order to understand the case. He flew to southern Missouri (which was closer to the property than Little Rock) and rented a car. Hours after losing his way down back roads, he finally followed a rough track bulldozed through the woods that ended up at the benighted Whitewater development. There were “For Sale” signs here and there, but nobody home. Had he returned a few months later, after the media swarmed in looking to photograph and interview anyone connected to Whitewater, David would have seen a large sign posted on one of the few occupied dwellings on the site: “Go Home, Idiots.”

Eventually David traced the current ownership of certain Whitewater lots to a local Flippin realtor named Chris Wade. We had not known that back in May 1985, McDougal had sold the company’s remaining twentyfour lots to Wade. Despite the fact that we were still partners then, McDougal had not informed us, asked us to sign off on the deal or offered to split the $35,000 proceeds. We were also unaware that McDougal acquired in this transaction a small used Piper Seminole plane that became his “corporate aircraft.”

By the mid-1880s McDougal presided over a small corporate empire, at least on paper.

In 1982, he had bought a small thrift called Madison Guaranty and quickly opened the cash spigot. McDougal aspired to be a populist banker, and he had grandiose ideas.

From what David Kendall could deduce, many of McDougal’s deals were questionable.

In David’s understated terminology, McDougal made “overly optimistic investments.”

Unfortunately, when he couldn’t cover the payments, McDougal shifted money around, borrowing from Peter to pay Paul. Unbeknownst to us, once he even used the Whitewater Development Company to buy property near a trailer park south of Little Rock that he confidently named Castle Grande Estates. His web of business partners and failed schemes would take years to untangle.

Madison Guaranty started out like thousands of other S&Ls that made small home mortgage loans. Then, in 1987, the Reagan Administration deregulated the savings and loan industry. Suddenly owners like McDougal could make large, reckless loans outside of their traditional businesses, and they eventually drove the whole industry, including Madison Guaranty, into serious financial trouble. One of the ways S&L executives and their lawyers attempted to salvage their failing businesses was by raising capital through preferred stock offerings, which they were permitted to do under federal law, if they had state regulatory approval.

In 1985, Rick Massey, a young lawyer at the Rose Law Firm, along with a friend of his who worked for McDougal, proposed just such a remedy for Madison Guaranty. Because McDougal had been negligent in paying a previous bill from Rose for legal services, the firm insisted that he pay a $2,000 monthly retainer before Massey undertook the work. My partners asked me to request the retainer from McDougal and to become the “billing partner” for Massey because, as a junior associate, he couldn’t bill a client himself. After I arranged the retainer, my own involvement in the account was minimal.

The stock offering was never approved by Arkansas regulators, and the federal S&L

regulators took over Madison Guaranty, removed McDougal as president and initiated an examination of the S&L’s transactions because of allegations that McDougal had engaged in a pattern of self-dealing.

The federal investigation and the criminal prosecution it later spawned against McDougal consumed him for years. In 1986 he approached us and asked if we would sign over our 50 percent share in the Whitewater Development Company. I thought it was a great idea. We had made our investment eight years earlier, and it had only cost us money. But before we signed over our stock, I asked McDougal to take our names off the mortgage, and in return for obtaining too percent of the remaining equity of the company, assume the remaining debt and release us from any remaining and future liabilities. When he balked at that, alarms started going off in my head. For the first time since we became partners in 1978, I demanded to see the books. I’ve been asked why I had never done that before and how I could have been so ignorant of McDougal’s actions. I’ve asked myself that too. I just thought we had made a bad investment and had to pay the price for buying real estate for second homes just as interest rates skyrocketed. We were stuck with a loser and had to wait for the market to turn around or until we could sell it. I had no