Damage Control at The New York Times
    by Gene Lyons

Consumer alert: another Whitewater column, hopefully my last. Two weeks ago,
I challenged New York Times editors to acknowledge a 1996 article with a fake
Associated Press byline describing non-existent “FBI testimony” about an imaginary
“$50,000 benefit” to Bill and Hillary Clinton. Because they have no answer, I expected none.

Even amid a national uproar over the newspaper’s practices, I also knew our esteemed
press corps would avert its eyes. It’s an unwritten law of contemporary punditry that
evidence of journalism’s ethical meltdown during the “Clinton scandals” must be ignored
or shouted down with references to oral sex and accusations of sycophancy. Hence the
pattern described by Princeton historian Sean Wilentz regarding my friend Sidney
Blumenthal’s book “The Clinton Wars”: respectful reviews by historians, shrill personal
attacks by Washington journalists.

Writing in New York Review of Books, former New York Times editor Joseph
Lelyveld accused Blumenthal of ducking several sensitive issues. Joe Conason cited
quotes and page references proving him wrong. This column listed egregious Whitewater
errors. Now Blumenthal has challenged Lelyveld to explain why key exculpatory
evidence about the Whitewater “psuedoscandal” failed to appear in The Times.
(See their exchange at nybooks.com/articles/16431.)

Specifically, Blumenthal asks why The Times all but hid the 1995 Pillsbury Report’s
conclusion that the Clintons were innocent of Whitewater wrongdoing. Also whether
Lelyveld ever saw memos written by former Arkansas Securities Commissioner Beverly
Bassett Schaffer to Times reporter Jeff Gerth previous to his original 1992 article
“which set forth facts undermining [its] chief premise” that Whitewater was a
“sweetheart deal” helping a shady operator win favors from state government.

To evade the first question, Lelyveld uses Conason’s and my book The Hunting of
the President as a straw man. He claims we falsely wrote that The Times ignored the
report altogether, implicitly leading Blumenthal astray. But Blumenthal didn't say that
and neither does our book, which Lelyveld cannot have read. It pointedly criticizes
The Times’ coverage, although we did get a date wrong, mistakenly writing that
“no word of the Pillsbury Report’s findings would appear in the New YorkTimes
until January 16, 1996.”

The corrected date was July 16, 1995. Headlined “Documents Show Clintons Got
Vast Benefit from Partner,” the article soft-pedaled the RTC’s findings that the
Clintons had told the truth about Whitewater. Confusing a corporation with a
partnership, it suggested they ought to have lost more than the $43,192 they did lose.
No hint of how poor McDougal, mentally ill and hurtling toward bankruptcy,
mismanaged the company for his own purposes and deceived them about it.
What The Times also neglected to report, Blumenthal notes, was prosecutor
Ray Jahn’s closing argument at McDougal’s trial saying essentially the same thing.

As to Schaffer, Lelyveld dismisses her as an inconsequential figure, then launches
a shameful attack upon her motives and actions. It’s tempting to wonder if Gerth
actually wrote it. He asserts that she represented Madison Guaranty as a private
attorney before becoming a state regulator. That’s false. She informed Gerth in
writing that the S&L was never her client, and she’d never met Jim McDougal.
(Schaffer’s memos are reprinted in my 1996 book Fools for Scandal.)

So why didn’t The Times ever report Schaffer’s 1987 effort to persuade federal
regulators to close Madison’s doors? Because, Lelyveld writes, she’d taken no
action until after the Feds kicked McDougal out on July 11, 1986: “From 1984
to 1986 Ms. Schaffer had the power to suspend McDougal herself and didn’t
use it while Madison Guaranty flirted with insolvency.”

This is doubly false. Schaffer took office in 1985, months after federal and state
regulators settled a disputed 1984 audit with Madison. After the next audit in 1986,
her office helped give McDougal the heave-ho. “At the [July 11, 1986] meeting,”
she wrote Gerth, “we jointly confronted the Board with the findings of self-dealing
and insider abuse….It was a long and confrontational meeting. The Madison
Guaranty Board members appeared stunned.”

I confirmed Schaffer’s account with Federal Home Loan Bank Board officials
quoted in Fools for Scandal. Oddly, The Times never did.

Almost everything Lelyveld writes partakes of similar question-begging. Did Schaffer,
for example, “approve two novel proposals to help the savings and loan that were
offered by Hillary Clinton?” His argument rests upon an ironically “Clintonian”
ambiguity about the meaning of “approve.” Schaffer confronted Madison  with
a regulatory Catch-22. She agreed it would be LEGAL for the S & L to sell
preferred stock, but mandated due diligence requirements it could not meet.
Hence Mrs. Clinton’s “novel” ideas, suggested by federal regulators to begin with,
died aborning.

“If anything,” the Pillsbury Report concluded“ Arkansas regulators took a more
aggressive position toward Madison Guaranty than did the FHLBB [Federal
Home Loan Bank Board].”

Instead of launching scorched-earth attacks on TheTimes’ critics, Mr. Lelyveld,
recently reappointed to edit the nation’s most indispensable newspaper, needs to
put his own house in order.

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