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August 3, 1994 - Part 5
(16:10:40) The CHAIRMAN, That's what I'd like to hear, is your recollection Mr, EGGLESTON. Sir, my recollection and, again, where this out was in Mr. Altman's first sentence when he turned to recusal issue. I didn't know and I don't think anybody there knew 93 he was going to start talking about this issue. My recollection is not that he told us that he had decided to recuse himself. My recollection is that he told us he was considering recusing himself. He was thinking about recusing himself. I think I saw his testimony yesterday. I think he says that he said he was inclined to recuse himself It was not my recollection that he told us he had decided to recuse himself. The CHAIRMAN. I asked earlier if we had last night's transcript. Because we went so late, it's not typed up in an index in the way we can refer to it, but my memory, his testimony was to us that he had reached a decision before he went to that meeting and did communicate that decision, so there's a bit of a difference of opinion as to what happened. We'll have to try to pursue that. Mr. EGGLESTON. In any event, as I say, whatever he said, it came out in the first sentence and I don't think any of us knew that sentence was coming. The CHAIRMAN. You mean that was the first thing up in the meeting? Mr. EGGLESTON. No, that was the first thing up when he finished the statute of limitations issue. He turned to a new issue we were not anticipating. The CHAIRMAN. I don't want to go past my time. Senator DODD. Just a point of inquiry because I'm curious as to whether or not we're going to go into this. I Last evening, I believe you indicated that this memo going to the Rose Law Firm was beyond the scope when the issue was raised last evening, and I'm just curious as to whether or not it is still ,beyond the scope of this hearing or not. The CHAIRMAN. We did discuss that and that issue was presented last evening in detail by Senator Domenici, but the feeling was that because it dealt with the line of succession as to who would make the decisions in the event of a recusal, that that in effect brought it within the scope of the general charter that we have on this issue. That was the argument. Senator DODD. If I'm not mistaken, and I want to check the record, but a similar question was raised last evening-and the Chairman can correct me if I'm wrong on this-but you made a determination that it was beyond the scope. I stand to be corrected not the case, but I thought that was the decision last evening. CHAIRMAN. I don't have that recollection but, unfortunately, we don't have the transcript here at the present time. Senator D'AMATO. I think clearly it would be incredulous if we were to take a position that this memo written by the White House relates to the line of succession and who will make the ulti- ion, which is really the scope of this memo, is beyond the Committee. Senator DODD. Senator, I'm not arguing about lines of succession. There was a decision last evening when this matter was raised. I'm repeating what I thought the issue was last evening Senator KERRY. Was not the full document made part of the 94 The CHAIRMAN. I thought it was. My recollection is that it was, but I can't be certain of that because it would have happened late at night and it was Senator KERRY. I was the one who was inquiring about it and I think afterwards Senator D'Amato followed up and Senator DAMATO. That's right, and I asked that it be placed in the record in its entirety. Senator DODD. I understand the point of succession but this goes into the matter of the scope of the hearing based on the resolution we agreed. This is the Rose Law Firm issue. That's not what the resolution talks about. That's that whole memo and I think we're going to face these issues. Senator DAMATO. We're not going into the Rose Law Finn orthis is a memo, among other things that touches on Whitewater. It says FDIC and RTC, Rose Law Firm issues. We're not going into the issues. The question this Committee will be attempting to ascertain is why is it and how is it that White House Counsel is providing this kind of legal documentation. Senator DODD. I'm asking a procedural question, Senator procedural question. I'm not challenging your right to ask questions. It seems to me this memo includes matter, the Rose Law Firm issue) which was beyond the scope of the resolution which defines our job. I'm merely asking the question as to whether a procedure, a parliamentary question is it within or beyond the scope. The CHAIRMAN. Let me say to the Senator, this document arrived late in the document production period. And it was not part of it, but when we became aware of it, we discussed it with the White House, and they were willing to make it available to the Committee, Now, my own view would be and my own questions have been, limited solely to the items that are within the scope of our inquiry. If somebody were to try to take it off into another area, then I think the scope issue would arise in terms of our getting into the discussion here, but that has not happened thus far. I would hope that would not happen. Senator DODD. Thank you, Mr. Chairman.
August 3, 1994 - Part 5
(16:15:48) The CHAIRMAN. Senator DAmato. Senator D'AMATO. Senator, I'm going to yield to Senator Bond because lie's going to want to return after a vigorous debate on the Floor in which he's going to participate in; is that right? Senator BOND. That is correct. I thank the Ranking Member and I thank the Chair, Mr. Chairman, this argument over the scope of the hearings and seeing all these attorneys before me makes me understand now why I left the practice of law, staying up late at night, spending Sundays reading depositions rather than other things. I spent this Sunday trying to go over the depositions, and I gather that you all were, too. Mr. Eggleston, when I signed in at Dirksen, I noticed that you. and Mr. Podesta had signed in to go to room 542, 1 was just curious what were you up to over here? Mr. EGGLESTON. Sir, I was here to read my deposition on Sunday. I had been invited to come down and read it, and that's what I did. Senator BOND. They made your deposition available to you? 95 Mr. EGGLESTON. Yes, only my deposition by the Senate was made available to me, and that's the only one I've read. Senator BOND. Mr. Podesta, I guess, read his? Mr. EGGLESTON. Yes. Senator BOND, Mr. Klein, we've heard witness after witness over the last several days talking about legitimate Government interest in the White House as having the heads-up on the details of confidential criminal referrals. There isn't a hotline for the average citizen to call the RTC to say, am I part of your investigation, but apparently the White House does get that kind of heads-up, and I think that's something that people may be a little bit concerned about, as to why the White House gets special treatment. Now, I would agree that Secretary Bentsen today made a good point, and I think others have inferred that there are some situations when you want to protect the President from an embarrassing or compromising encounter. It was very regrettable a few years ago that then Vice President Bush wound up having his picture taken with Manuel Noriega just before he was indicted. I think that there are probably legitimate interests in keeping the President from associating with people who are going to have major criminal actions brought against them. Is that one of the legitimate reasons for giving the White House a heads-up? Mr, KLEIN. I believe so, Sir. Senator BOND. Would you explain how that would work and what would happen if the President were greeting a foreign visitor, for example? If he were going to greet a foreign visitor and you found he was going to be Noriega-ized, what would be your responsibility? Mr. KLEIN. I had one experience with this, sir, and I could tell you how we did it in this instance. We did get a so-called headsup from the office of the Deputy Attorney General. I then notified the Chief of Staff that the President was going to be in a room with certain people and that the President should not be taken aside and be put in a position talking alone with this person. That's the way it was handled. Senator BOND. Since we understand that Governor Jim Guy Tucker was referred to as a target in the RTC criminal referrals and the President was to meet with him within about a week after the heads-up from the RTC from Mrs. Hanson, was a similar kind of warning given to the President? T
August 3, 1994 - Part 5
(16:19:35) Hearings host NINA TOTENBERG segues back to House Banking Committee Hearings - testimony of JEAN HANSON, JOSHUA STEINER, DENNIS FOREMAN, and JACK DEVORE
August 3, 1994 - Part 5
(16:38:00) Hearings host DON BODE voice over segue back to Senate Banking Committee Hearings: The CHAIRMAN. Let's go ahead and restore Senator DAmato's time and then at the end of the statement, if the Members want to have a comment to make, we'll Mr. EGGLESTON. Mr. Chairman, I most definitely do have a comment to make at the conclusion of Mr. D'Amato's statement. Senator D'AMATO. Mr. Klein, in your deposition, you stated that you had discussions with Bernard Nussbaum, then-White House Counsel, concerning the possible recusal of Roger Altman from all RTC decisions involving the Madison case; is that correct? Mr. KLEIN. That is correct, sir, Senator DAMATO. In one of those discussions with Mr. Nussbaum, did you come to learn that Mr. Altman had had a meeting at the White House with several White House officials at which Mr. Altman 's recusal had been discussed? Mr. KLEIN. Yes, I did, sir. As I said in my opening testimony, approximately a week after the February 2nd meeting I learned of that fact, Senator DAMATO. Do you know whether White House officials advised Mr. Altman with respect to his decision to recuse himself in all RTC dealings in connection with Madison? Mr. KLEIN. I did not know, sir, no. Senator D'AmATo. You have a view about whether it was improper for the White House staff to advise Mr. Altman with respect to his decision to recuse on a matter that would affect Madison or Whitewater, Mr. KLEIN. In my opinion, the White House staff shouldn't advise Mr. Altman on that matter, sir. Senator DAMATO. Would it be imprudent? Mr. KLEIN. I think it would be imprudent. Senator DAMATO. You have a view whether it would be proper for White House staff to put pressure on a Government offical not ,to recuse himself? Mr. KLEIN. In a matter relating to the White House like this, I do have a view on that, sir. I think it would be improper to put Senator DAMATO. Did Mr. Nussbaum ever express a preference concerning whether Mr. Altman should recuse himself from RTC decisions involving Whitewater? Mr. KLEIN. He did discuss a preference with me, sir, yes. Senator D'AMATO. And what was that? Pressure on an official. Mr. KLEIN. He preferred that Mr. Altman not recuse himself. Senator DAMATO. And did he tell you why? Mr. KLEIN. He said that he preferred that because he thought that the politics were such. in other words, there were political con 102 siderations at this time, Ms. Rickie Tigert was before a Committee this was in early February, before a Committee and that Commit- tee or several Members of the Minority were trying to extract a blanket recusal.
August 3, 1994 - Part 5
(16:40:48) There were also press calls and-in that regard, and people call, ing for, as well, Mr. Altman's recusal. Mr. Nussbaum said he thought, as a matter of principle, that people shouldn't recuse unless they were required to. He also said, in particular, he said that he was concerned about Ms, Kulka. Senator DAMATO, What did he say about his concern as it related to Ms. Kulka? Mr. KLEIN. He said that Ms. Kulka was someone he had known from a case he had done, the Kaye, Scholer case in private practice, and he said in words to this effect, I don't believe I can quote it, but that she was a difficult person to deal with, she was unreasonable, she could be unfair. Senator D'AMATO. Is it clear to you, based on your conversations with Mr. Nussbaum, that he preferred to have Roger Altman as the decisionmaker? Mr. KLEIN. Yes, sir. Senator D'AMATO. Do you know why Mr. Nussbaum-well, you said that and I see our time is running out. Let me ask you this. Did he indicate anything about dealing with Ms. Kulka, that you recall? Mr. KLEIN. I believe he said he had had an experience with her in the Kaye, Scholer case, when he was in private practice. Senator D'AMATO. And what was that experience? Mr. KLEIN. He was a lawyer, as I understand, he was representing Kaye, Scholer when Ms. Kulka was involved, she represented the OTS in a proceeding against Kaye, Scholer. That was my understanding. Senator D'AMATO. Did he say something like she was tough? Mr. KLEIN. The words that come to my mind are "difficult" or "unreasonable," sir. Senator D'AMATO. What about "aggressive"? Mr. KLEIN. That is consistent with what he said, yes. Senator D'AMATO, I want to thank you for your very candid testimony, Mr. Klein. The CHAIRMAN. Let me also say before yielding to Senator Sasser that we've heard a lot of witnesses and I'm refreshed by the fact that the answers we've gotten so far are more straightforward and , I think, direct than some of the others we've gotten, and that I rind that a refreshing tone and I appreciate that, and I just want to say that now to the witnesses that are here. Mr. Eggleston, you'd asked to make a comment and I said we'd permit that. Mr. EGGLESTON. Thank you, Mr. Chairman. In light of the comments that Senator D'Amato made, I have been counting up the number of individuals and entities that have reached the conclusion that Mr. Altman did not have a legal obligation, ethical obligation to recuse himself. I think the suggestion that Mr. D'Amato made was that I needed to go back, I think I and all of us needed to go back to Ethics 101 if we couldn't see that he absolutely had an obligation to do so. 103 My understanding, as I sit here today, is that prior-that Mr. Altman had discussed this with a variety of people at the Treasury Department prior to the time that he had the February 2nd meeting and that the advice he got was either that he did not have a legal obligation to recuse himself or that people gave him political advice. Senator Bentsen said it's up to you. I think Ms. Kulka, to the extent I remember, did not tell him that he had a legal or ethical obligation to do so. My recollection is that there had been some discussion with Mr. Foreman, the Treasury Department Ethics Officer, beforehand on the legal or ethical obligation. He was told he did not have such. He was told-Mr. Altman was told at the February 2nd meeting that if he had a legal or ethical obligation to recuse himself, he should do so. At the end of that meeting, it is my recollection that he was going to seek legal ethics opinions from the Ethics Officer at the RTC and from the Treasury Department. Based on the testimony I've heard here today, he did so and those two officials determined that he did not have a legal or ethical obligation to recuse himself. This matter has also been reviewed by Mr. Cutler who came in, was brought in in order to review this. Mr. Cutler determined that he, Mr. Altman, did not have a legal or ethical obligation to recuse himself. This matter was also reviewed by the Office of Government Ethics, an independent agency under the supervision of Mr. Potts. Mr. Potts, as we have heard, was appointed during the Bush Administration, he is at least a Republican appointee, if not a Republican. Mr. Potts, at the conclusion of extensive factual investigation by the Treasury Department, I think, concluded two things: That Mr. Altman did not have a legal or ethical obligation to recuse himself. Mr. Potts, in addition, concluded that it was perfectly appropriate-that it was not legally or ethically inappropriate-for Mr. Altman to discuss his recusal issue with anyone he wanted.
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August 3, 1994 - Part 5
(16:45:21) I don't have enough fingers to have quite counted up the number of entities, apart from myself, who are legal and ethics experts who .have come to the conclusion that Mr. Altman did not have a legal or ethical obligation to recuse himself. The discussion and the issues that were under discussion at the time, February 2, were not legal/ethical discussions, If he had a legal or ethical obligation to recuse himself, he would do so. It was political, It was how was it going to look. It was where was he going to take more heat. Was he going to take more heat if he stayed there or was the Administration going to take more heat through the sort of impact of domino effect after Rickie Tigert. Was Jamie Gorelick going to be asked to recuse herself. Mr. Ludwig, on the 25th, even though there is no matter in front of him, decides to recuse himself. Is some midlevel person at the EPA going to be asked to recuse herself, even though there is nothing remotely in front of her. The issue was political and press and congressional; it was not legal/ethical, and I think the fact that every entity that has looked at it came to that same conclusion is worth an enormous amount to me, sir. The CHAIRMAN. I think it was important that you have a chance to put your statement on the record. You've done that. 104 Senator DAmato has asked for 30 seconds to respond. I think in light of the time that was taken to do that, that it's not ail unreasonable request, so Senator D'AMATO. Mr. Chairman, I'm just trying to make the point that we've invented a Senator KERRY. It's not an unreasonable request, Mr. Chairman but oil the other hand, it absolutely breaks up the process here and totally sets a different standard for how we're proceeding. I'm just saying to my friend that, you know, we're going to get into that same old problem at the end of the line here. Senator D'AMATO. I just wanted to make an observation, if I might. The CHAIRMAN. I think when-I'm told by the clerk over here that when the objection was raised by Senator Boxer that it had the effect of taking 40 seconds off his time so let's restore that and Senator KERRY. He already did restore the time. The CHAIRMAN. Well, I'm told we did not-well, now I'm told that we did. So I'm getting conflicting messages myself. I recognize Senator D'Amato for 30 seconds. Senator D'AMATO. Mr. Chairman, I just wanted to make the point that we've heard a lot about this new definition, and I'd like to know what is the legal definition of "de facto recusal"? What does it mean? That's my point and that's what I raised because I kept hearing it over and over, and I thank my colleagues. The CHAIRMAN. We'll get into that. Senator Sasser. Senator SASSER. well, thank you, Mr. Chairman. Mr. Eggleston, you learn in law school one thing is elementary as in is there a de facto position and a de jure position, and would you explain for the Committee the difference between the two or perhaps I ought to do it. De facto is when something is actually the fact of the matter and de jure is something which might appear to be legal or perhaps you'd have a better definition, but let's hear the definition of that. Mr. EGGLESTON, I can tell you the way I'm using the two words and I don't-I assume they're consistent with the way others are. There were two things he could have done. He could have publicly announced that he was taking himself off the case or he could have done what he did, which is just announce to his staff and to the White House-he did to both, Ms. Kulka testified before you that he told her the same thing-he could announce that he was not going to be a decisionmaker on this matter. I've called that de facto. Senator Sasser, if you have a better word for that, I don't -- I didn't mean to coin a phrase by using that expression, but what I meant was he was not going to participate in the decision. That's something he told us and that's now something I understood that he told his own staff, his own RTC staff. Senator SASSER. So he was essentially out of the decisionmaking line on the question of whether or not to proceed with the civil actions against Madison Guaranty S&L. Mr. EGGLESTON. That was my understanding as of the February 2nd meeting. 105 Senator SASSER. Of course, that all became irrelevant on down the line because the statute of limitations was extended and it made no difference whether or not he chose to proceed with the action against Madison or not. Mr. EGGLESTON. That's correct, both Houses of Congress passed the extension. I think the President signed it on February 12th extending the statute through December 31, 1995. Senator SASSER. Now, Mr. Eggleston, let me ask you this: Did you attend the October 14, 1993 meeting that was attended by Ms. Hanson, the General Counsel of the Treasury Department, and Mr. Steiner and Mr. DeVore? Mr. EGGLESTON. I did, sir. senator SASSER. Did you also attend the meeting on February 2, 1994 with Mr. Altman and Ms. Hanson?
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