Did Web Hubbell Play Both Sides Of Madison

Hubbell, the Rose firm’s senior partner, first became involved in Whitewater in 1989, when the federal government took control of Madison. The Federal Deposit Insurance Corporation (FDIC), seeking to recover money lost by depositors, decided it was pointless to sue Madison’s officers. Instead, it went after the bank’s accounting firm, Frost & Co., which a few years earlier produced an audit claiming that Madison was in good health. Looking for help with the crush of S&L litigation, FDIC attorney April Breslaw hired Rose to sue Frost.

But according to a new report by another agency responsible for S&L cleanup, the Resolution Trust Corporation (RTC), the Rose firm concealed a critical point from FDIC in 1989: that Madison once had been its client. In 1985 Hillary Rodham Clinton sought regulatory approval for McDougal’s plans to shore up the bank’s financial base. To bolster its case before state securities regulators, the firm used Frost’s reassuring audit-the same one Rose would now challenge in the government’s lawsuit.

What the FDIC did know about Rose should have been disturbing enough. Hubbell’s father-in-law. Seth Ward, an officer of a company affiliated with Madison, had won a $447,000 judgment against the bank for unpaid commissions, FDIC attorney Paul Jeddeloh says Hubbell was even present in court as Ward pursued his claim. Ward’s brother-in-law had also sued Madison. “. . . There appears to be a conflict in representation and a question of loyalties,” Jeddeloh Wrote in a June ‘89 letter to Breslaw.

Some agency officials were worried that sensitive data about Madison would be compromised. “To believe that none of this information will make it back to [Hubbell’s] family is naive,” another staffer warned Breslaw in a memo. She dismissed conflict-of-interest concerns, however, explaining that Hubbell would not be Rose’s lead attorney in the Frost case. But law-firm bills obtained by NEWSWEEK show that Hubbell, in fact, played a major role, preparing motions and depositions and interviewing potential witnesses. Rose settled the case in 1991 for just over $1 million-far less than the $20 million the FDIC sought. It also collected $400,000 in fees and expenses.

Yet the FDIC maintained in a report earlier this month that the Rose firm violated no conflict-of-interest rules. When Republicans on the Senate Banking Committee yelled whitewash last week, the agency agreed to review its findings. The administration compounded GOP suspicions when Deputy Treasury Secretary Roger Altman, acting head of RTC, revealed that he’d held an unusual briefing for Clinton aides on the agency’s Whitewater probe. Altman said there was nothing improper about the meeting. But the next day he recused himself from Whitewater matters. Hubbell, who says he isn’t talking while special prosecutor Robert Fiske conducts his inquiry, can’t distance himself as easily.

title: “Did Web Hubbell Play Both Sides Of Madison " ShowToc: true date: “2023-01-14” author: “Roger Danz”

Hubbell, the Rose firm’s senior partner, first became involved in Whitewater in 1989, when the federal government took control of Madison. The Federal Deposit Insurance Corporation (FDIC), seeking to recover money lost by depositors, decided it was pointless to sue Madison’s officers. Instead, it went after the bank’s accounting firm, Frost & Co., which a few years earlier produced an audit claiming that Madison was in good health. Looking for help with the crush of S&L litigation, FDIC attorney April Breslaw hired Rose to sue Frost.

But according to a new report by another agency responsible for S&L cleanup, the Resolution Trust Corporation (RTC), the Rose firm concealed a critical point from FDIC in 1989: that Madison once had been its client. In 1985 Hillary Rodham Clinton sought regulatory approval for McDougal’s plans to shore up the bank’s financial base. To bolster its case before state securities regulators, the firm used Frost’s reassuring audit-the same one Rose would now challenge in the government’s lawsuit.

What the FDIC did know about Rose should have been disturbing enough. Hubbell’s father-in-law. Seth Ward, an officer of a company affiliated with Madison, had won a $447,000 judgment against the bank for unpaid commissions, FDIC attorney Paul Jeddeloh says Hubbell was even present in court as Ward pursued his claim. Ward’s brother-in-law had also sued Madison. “. . . There appears to be a conflict in representation and a question of loyalties,” Jeddeloh Wrote in a June ‘89 letter to Breslaw.

Some agency officials were worried that sensitive data about Madison would be compromised. “To believe that none of this information will make it back to [Hubbell’s] family is naive,” another staffer warned Breslaw in a memo. She dismissed conflict-of-interest concerns, however, explaining that Hubbell would not be Rose’s lead attorney in the Frost case. But law-firm bills obtained by NEWSWEEK show that Hubbell, in fact, played a major role, preparing motions and depositions and interviewing potential witnesses. Rose settled the case in 1991 for just over $1 million-far less than the $20 million the FDIC sought. It also collected $400,000 in fees and expenses.

Yet the FDIC maintained in a report earlier this month that the Rose firm violated no conflict-of-interest rules. When Republicans on the Senate Banking Committee yelled whitewash last week, the agency agreed to review its findings. The administration compounded GOP suspicions when Deputy Treasury Secretary Roger Altman, acting head of RTC, revealed that he’d held an unusual briefing for Clinton aides on the agency’s Whitewater probe. Altman said there was nothing improper about the meeting. But the next day he recused himself from Whitewater matters. Hubbell, who says he isn’t talking while special prosecutor Robert Fiske conducts his inquiry, can’t distance himself as easily.