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August 3, 1994 - Part 7
(18:55:23) Senator DOMENICI. I understand. So what he's telling us is: "it's enough for you to know that they were about press inquiries. You don't have to know what the subject was." That's the way I read it. Now, you don't have to answer that. Mr. Klein, do you know something about these letters and the handling of the responses by Roger Altman? Mr. KLEIN. Only that I've read them, sir. That's all I know. Senator DOMENICI. You've seen both of those letters? Mr. KLEIN. I have. Senator DOMENICI. Would you agree generally, so I won't waste a lot of time, with what I've said here and with what your fellow Counsel said about these letters? Mr. KLEIN. Yes, I would. Senator DOMENICI. If you were preparing a letter, either or both Of You, for somebody in the White House that you were responsible for, and you were attempting to answer Mr. Podesta's concerns 136 about Roger Altman not telling us something, is this the kind of letter you'd write? Mr. KLEIN. Sir, again, I don't want to put myself in Mr. Altman's mind. I didn't speak to him. The information that I had, we tried to make sure that it went to Mr. Altman through Mr. Podesta. Mr. EGGLESTON, Senator Domenici, could I say one thing, sir, in the interest of completeness and 1 just offer this. That is that the letter does reference the question from Senator Bond. My recollection is that the question from Senator Bond was about criminal referrals. I just offer that for the what-it's-worth category. He references in the March 2nd letter the question from Senator Bond. He does not point out in the letter that the question related to criminal referrals, but he does reference a question that did relate to criminal referrals. Senator DOMENICI. That's more reason for him to refer to it, it seems to me, since his answer was "no" when it was asked. Is my time up? The CHAIRMAN. It is, and if you had just one follow-up, I'd certainly entertain that because we did that on this side but otherwise we'll go on to another round. Senator DOMENICI. I would also ask both of you, as competent lawyers who work in this field a lot, do you notice anything, inferential or otherwise, in either of these letters that would indicate to this Committee that more corrections are to come? Do you see anything in there that would indicate to us that you've got to fix the record some more? Mr. KLEIN. I don't see it. Obviously, the letters speak for themselves. You can assess them as well as I can. Senator DOMENICI. Let me ask again, if this Committee, under the Chairmanship of Senator Riegle, were wrapping up that February 24th hearing and got these two letters; is there anything to indicate that maybe he's got some more things to correct? To me, I would think it was over with, that there aren't any more. Mr. KLEIN. Again, I don't know. He said he had conversations with people on the Committee. I can tell you what the letter says but you can read it for yourself. Senator DOMENICI. Thank you very much. The CHAIRMAN. Senator Campbell. Thank you for your patience Senator CAMPBELL. Also as my friend Senator Boxer has said, I would like to commend this Committee. I think they've tried to answer in a very forthright manner and to the best of their recollections and very openly. I know it's difficult to answer some of the variety of questions that have been asked. Some of them are reflective of the members' former professions of being criminal prosecutors. Some of them are kind of fishing expeditions, I guess, hoping you're going to run into a hook. And I personally liked Senator Dodd's questions; did you do it or didn't you do it, yes or no, And those are the kind of answers I understand very well when they're asked, but I know you have to answer a big variety of them. (18:59:12)(tape #10082 ends)
August 3, 1994 - Part 8
(19:55:50) And then we made clear we had no idea at all what decision would be reached. I did say, however, that if I received a clear recommendation-this is Mr. Altman's proposed testimony that's being prepared, she's going over it with you-from the RTC's Chief Legal officer, I would follow it. I also said that I was reserving judgment on a recusal. This is what he was about to testify as it related to the meeting on the 2nd. (19:56:18) From tv studio hearings hosts NINA TOTENBERG and KEN BODE close out coverage (19:58:18) WETA logo, PBS funding credits (19:58:39)(tape #10083 ends)
August 3, 1994 - Part 9
(02:03:58) Testimony of JEAN HANSON, JOSHUA STEINER, DENNIS FOREMAN, and JACK DEVORE before House Banking Committee
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August 3, 1994 - Part 8
(18:59:36)(tape #10083 begins) Senator CAMPBELL. That's fine. I'm really interested in the chain of command of who does the assigning of issues and who gets advice from who before moving on any issue. Mr. KLEIN. Typically, Senator, the Counsel to the President, Mr. Nussbaum first, now Mr. Cutler, has overall responsibility for matters. The way, I think, both gentlemen worked was as follows-at least when I was Deputy, and I was only Deputy since December of last year-and that is on many matters, they would deal directly with an Associate Counsel who had-for example, on an ethical matter deal directly with Beth Nolan, on a matter involving some Constitutional issue, might deal directly with Cliff Sloan and so forth. There were other matters that they would assign to me, and then I would reassign some of those or supervise some of those. And that's the way it worked basically, sir. Senator CAMPBELL. If you were Counsel who was assigned a certain area, then you didn't need direction from Mr, Nussbaum. Is that the way it worked? Mr. KLEIN. Again, it would depend on the activity. I think most of the people kept Mr. Nussbaum informed of what they were doing, although, like any people, they exercised some discretion on their own. Senator CAMPBELL. Who directed Mr. Podesta to call Mr. Altman? Mr. KLEIN. My understanding of that is that when these events occurred, there was, I think, as has been said here, some concern, Mr. Eggleston, myself other people. The Chief of Staff, Mr. McLarty, was obviously concerned this matter be dealt with accurately and straightforward and I think he asked Mr. Podesta to kind of get on top of this. That's my impression. You can check with the two of them. Senator CAMPBELL. Would you give me a little rundown again? The press said it took 7 days after the hearing of February 21st for that call to be made and you corrected that and said it wasn't. It was more like 5 and it was because it started on a Thursday and Mr. Nussbaum was in Mexico. Was that Mr. KLEIN. That's correct. Basically, what Mr. Eggleston said which was that he was at the meeting-he was at the hearing on Thursday the 24th, and he Senator CAMPBELL. And you felt that you needed his approval for Mr.- maybe I'm mixed up a little bit here, but Mr. Podesta is a Staff Secretary, is he not? Mr. KLEIN. He is a Staff Secretary, yes, sir. Senator CAMPBELL. Did he need your approval or Mr. Nussbaum's approval to make the call? Mr. KLEIN. I don't think he needed anyone's approval. I think certainly the people on our staff thought it was very important to report this information, to have Mr. Nussbaum there. The information essentially--the hearing ended, obviously, on the end of the day Thursday. The information was in the press on Friday. I learned of some of the information from Mr. Sloan later Friday afternoon. Monday morning, Mr. Nussbaum was going to be back 138 in the office and we got right on it. Tuesday afternoon, we made the phone call, Senator CAMPBELL. Even after that call, it took about another 3 weeks to get the record corrected; is that correct? Mr. KLEIN. Well, there was a series of follow-up letters. I don't have the dates in front of me. Senator CAMPBELL. Were you involved in consultations with Mr, Altman during that period of time? Mr. KLEIN. No, sir, Senator CAMPBELL. Who was? Was there anybody in the White House Counsel who was? Mr. KLEIN. Nobody in the White House Counsel, to my knowledge. The only person I know who had that original phone call was Mr. Podesta. Senator CAMPBELL. Ms. Nolan, you were part of the White House team that discussed whether the White House should correct Mr. Altman's testimony; is that correct? Ms. NOLAN. Senator Campbell, I was in one discussion about it. Senator CAMPBELL. Would you tell us who was also in that discussion? Ms. NOLAN. Mr. Klein, Mr. Nussbaum and, I believe, Mr. Eggleston. Senator CAMPBELL, Was there any difference of opinion or a feeling that perhaps it was unnecessary to make any part of corrections--when you had that meeting, was there sort of a unified approach when you ended up about what corrections should be made or Ms. NOLAN. The part of the discussions I was in, I don't think we reached a final conclusion. What I recall was that the issue was being discussed. This was the first day that Mr. Nussbaum was back, that Monday. And I just recall that we were exploring the issue, so I don't recall a particular conclusion. Senator CAMPBELL. After it was corrected, did Mr. Altman's March 2nd letter to correct the record reflect what you had discussed in that meeting? Ms. NOLAN. Senator Senator CAMPBELL. To the best of your recollection. Ms. NOLAN. I'm not familiar with the letter and I didn't participate in follow- up meetings. Senator CAMPBELL. Thank you, Mr. Chairman. I'll yield. The CHAIRMAN, Thank you, Senator Campbell. Senator Hatch. Senator HATCH. Thank you, Mr. Chairman. I just want to say, having listened to all of you, I think the White House is served well by its Legal Counsel down there at this time, at least the four of you. But let me ask a couple of questions, Mr. Eggleston, if I can direct them to you, maybe you can help us. You understood from your discussions with Mr. Nussbaum following the February 2nd meeting at the White House that he was very concerned that if Mr. Altman recused himself, Jack Ryan and Ellen Kulka would be in charge of decisionmaking in the Madison Guaranty case; is that right? Mr, EGGLESTON. Mr. Hatch, he was not-he was never concerned about Mr. Ryan. There was never any discussion. 139 Senator HATCH. There was concern about Ellen Kulka? Mr. EGGLESTON. Yes.
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August 3, 1994 - Part 8
(19:05:15) Senator HATCH. And as I understand it, in your deposition, you did say "Mr. Ryan, of whom he had no opinion. Of course, actually it was my understanding with Ryan, she is just involved in the process, but I don't want to overdo this. " You were asked the question "did Mr. Nussbaum state a concern that absent Mr. Altman's involvement in Madison-related matters it would be left in the hands of Mr. Ryan, whom he didn't know, and Ms. Kulka, of whom he had a low opinion?" And your answer was "yes-I mean I should say--and earlier I sort of qualified this--I think these conversations were pre-February 2nd, my best recollection is that these were pre-February 2nd." Then the next question was, "was this an issue that Mr. Nussbaum appeared to be concerned about? "Answer: I can only tell you what he said. "Question: You can't tell us in your experience whether he was more concerned than he was about most issues or less concerned? "Answer: I can't. It was just an issue. "Question: Did any other White House staff members, to your knowledge, state similar views or concerns before February 2, 1994? "Answer: Not that I recall. I don't think anybody else had any knowledge of Ms. Kulka or Mr. Ryan," et cetera. Now, you took part in the meeting with John Podesta and Todd Stern regarding the hiring of Jay Stephens by the RTC? Mr. EGGLESTON. Yes. I'm saying yes, I sort of vaguely remember. Senator HATCH. You were there? Mr. EGGLESTON. Yes. Senator HATCH. OK. And in this meeting, Mr. Podesta wanted to find out if Mr. Stephens had been hired; right? Mr. EGGLESTON. Sir, I remember making a call to Ms. Hanson either on the 24th or on the 25th to ask about that question. I'm sorry, sir, I don't quite remember this meeting. I probably would have made that call at the request of somebody. It may well have been Mr. Podesta'. Senator HATCH. Did you understand from this meeting that Mr. Podesta would have preferred that Mr. Stephens not be working for RTC on the Madison Guaranty matter? Mr. EGGLESTON. I can only describe it this way. People were generally stunned that the RTC would have hired Mr. Stephens, and I don't think that anybody I heard said we should do something about it or something like that. People around the White House were stunned that they would have hired Jay Stephens. Senator HATCH. Would have hired Jay Stephens. Mr. EGGLESTON. Yes, sir. Senator HATCH, On February 25, the day Mr. Altman decided to recuse himself from the Madison Guaranty matter, you called Jean Hanson, as you just said to confirm that Jay Stephens had been hired? Mr. EGGLESTON. Yes, sir. Senator HATCH, And you expressed to Ms. Hanson the White House's displeasure? Mr. EGGLESTON. I don't think I did. Senator HATCH, You don't think you did. 140 Mr. EGGLESTON. I think I just-I was very sensitive to this issue by the morning of the 25th. I think I called her. I asked her whether it was public information. I told her that it was-that Mr. Alt man had testified the day before that it was Pillsbury, Madison & Sutro. I called to ask her whether it was Jay Stephens, the attor- ney, and I think I said to her, I assume that's public information, By the morning the of the 25th I'm sensitive to what information I'm getting from the Treasury about this issue, and I don't think I did convey back to her that we were unhappy. Senator HATCH. Did you discuss with Ms. Hanson who at the RTC would be making the--who actually would be making the de cisions in the Madison Guaranty matter now that Mr. Altman had recused himself? Mr. EGGLESTON. I did not. Senator HATCH. I believe you said earlier that you had discussions with several White House officials about the hiring of Jay Stephens. Could you name with whom you've had those discussions? Mr. EGGLESTON. The ones that I really think about that I talked to--I indicated to you earlier I couldn't remember having a meeting. I remember talking about it with Mr. Podesta and Mr. Stern. Mr. Stem is Mr. Podesta's Deputy. They have off-ices next to each other. Senator HATCH. Sure. Let me ask you some questions about a February 28, 1994 memo from you to Harold Ickes, the White House Deputy Chief of Staff. First, let me ask you, are you aware that the very next day, March 1st, Mr. Ickes forwarded your memo to the First Lady? Mr. EGGLESTON. I am now aware. I was not aware of that then. Senator HATCH. You testified that Mr. Ickes asked you to prepare your February 28th memo. Did you also talk with Mr. Nussbaum about this memo? Mr. EGGLESTON. I don't recall. I would have prepared a memo like this only at the request of Mr. Ickes. I would not have necessarily checked it with Mr. Nussbaum. Senator HATCH. Would Nussbaum have seen it? Would he have approved it? Mr. EGGLESTON. He would not necessarily-I'm sorry? Senator HATCH. But he looked at it? Mr. EGGLESTON. He would not have necessarily approved it. I may have given him a copy. Senator HATCH. The reason I ask you is because you said in the last paragraph here, "we intend to nominate a person for the position of CEO for the RTC within the next few weeks," and you said you learned that from Bernie Nussbaum himself. Mr. EGGLESTON. Yes, I think that's right, but I think I learned that not in connection with the preparation of this memo. I think I knew that independently. Senator HATCH. On the last page, page 6 of your memo, it addresses the question "who at the RTC would be the decisionmaker in whether to bring a civil action arising out of the failure of Madison Guaranty?" Now, this question had been a subject of intense interest at the White House ever since Mr. Altman first raised the prospect that he would recuse himself-, isn't that right? 141
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August 3, 1994 - Part 8
(19:10:37) Mr. EGGLESTON. Well, yes, although---certainly, yes, sir. Senator HATCH. Now, your memo points out that both Jack Ryan and Ellen Kulka are "career officials." Right? Mr. EGGLESTON. Yes, sir. Senator HATCH. That means, doesn't it, that they were not appointed by President Clinton? Mr. EGGLESTON. They were not appointed by President Clinton. I think that they got their jobs-I think that their hiring into their jobs as head of RTC-I think, sir, and you should ask someone else-but I think that they got their jobs in the RTC during the Clinton Administration but they Senator HATCH. But they were not appointed by the President? Mr. EGGLESTON. They were not appointed to the OTS by the President. I think the White House had some role in them being moved to their jobs at the RTC, sir, I believe. Senator HATCH. What it means by "career officials" is that they have job security, they can't be fired. Mr. EGGLESTON. What I meant by it is that they were long-term Government officials. That's what I meant. Senator HATCH. And you pointed out in your memo that Mr. Ryan and Ms. Kulka were career officials. Isn't the reason you did is because you wanted Mr. Ickes, and anyone else at the White House who read your memo, to understand that neither of these officials could actually be counted on to protect the interest of the White House? Isn't that basically true? Mr. EGGLESTON, Well, sir Senator HATCH. I'm not trying to put words in your mouth, but, I mean, basically that's what you're pointing out to them. Mr. EGGLESTON. On that issue, sir, I have to disagree. I think that they were going to decide whatever they had to decide. I don't think we were asking anybody to protect Senator HATCH. But that was the in-between-the-lines message that you as an attorney were sending, that, look, these are not people you can rely on, these are career employees. And you may have even known that Mr. Nussbaum thought that Ms. Kulka was a tough, aggressive lawyer from his private sector experience. Mr. EGGLESTON. I did know that, but I was not trying to send some message between the lines, I was just saying who they were. Senator HATCH. But you obtained that knowledge that they were career officials from Jean Hanson; right? Mr. EGGLESTON. Sir, I first obtained this information in a Legal Times article that was written about Ms, Kulka in January of 1094. There was a big story about how she had gotten her job and that was the first time I really learned about who Ms. Kulka was and who Mr. Ryan was, There was a Legal Times of Washington story in January. Senator 14ATCH I notice my time is up. I have two more ques- tions Mr. Chairman. I have two more questions that would tie this down, but I The CHAIRMAN. Pardon? Senator HATCH. I notice my time is up but I have two more questions that would tie this down, The CHAIRMAN. How long do you think they'll take, Senator Hatch? 142 Senator HATCH. I hope not much more than a minute, minute and a half. The CHAIRMAN. Why don't you take them, then, Senator HATCH. I think it might be good to do that. You next point out in your memo that if the person soon to be nominated were to recuse himself from the Madison Guaranty matter, then Mr. Ryan and Ms. Kulka would remain in charge; right? Mr. EGGLESTON. Yes, sir. Senator HATCH. And your purpose in making that point, again, seems to me would be to highlight that the White House might. want to address the issue of recusal with any potential nominee of the CEO of the RTC before naming that person as CEO; right? Mr. EGGLESTON. Sir Senator HATCH. Because you don't want to get into that again., Mr. EGGLESTON. Sir, I assumed that whoever came up who was a Presidential appointee was going to be asked by the Senate to recuse themselves from that matter. That's actually what I'm con. veying here. I thought whoever got nominated by the President would be forced to recuse themselves so that the decision would remain with Ms. Kulka and Mr. Ryan. That's actually what I thought was going to happen. Since we haven't nominated somebody, it hadn't happened. Senator HATCH. You pointed out that your February 28th memo is a revised version. Can you tell me how it differs-in what respect it differs from the original version and did Mr. Ickes review the original version and ask you to make changes and, if so, what changes? Mr. EGGLESTON. I was asked this earlier, and I'm pretty vague on this Senator DODD. Mr. Chairman, I interrupt. I think this is one area that, I think, does get into the scope question. I would just ask the Chair Senator HATCH. It does? Just let me limit it to the last part, then. Mr. EGGLESTON. It's not going to get into the scope because I don't remember the answer, I don't remember. I think that-my best recollection, which may not be accurate, is that Mr. Ickes looked at it, had a few more questions and asked me to add some stuff I don't remember what he asked me to add, and 1 don't have a copy of the unrevised version. I've looked in my files and I don't have them. Senator HATCH. Thank you for your indulgence, Mr. Chairman. The CHAIRMAN. Thank you. Senator Moseley-Braun. Senator MOSELEY-BRAUN. Thank you, Mr, Chairman. To this panel, I must say we were very fortunate to have so forthright a panel, given the fact that we were here so late last night and so I want to add my thanks and congratulations to the members of this panel for the testimony that you've given this afternoon. I'd like to pick up where Senator Roth left off. And actually put for the record, because I don't know, Mr. Chairman, if it was actually received for the record, the ethics memoranda issued by the Counsel for the President, Mr. Nussbaum-well, several of them, actually, that were issued-I'd like to have them received for the record and by that, I mean the February 22nd ethics memo, the 143 March 9 ethics, memo, the May 4th ethics memo and the follow-up of July 2.
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