Damaging Damage Control

EMBARRASSING RECORDS LONG UNDER subpoena have been popping up all over the White House. Consider what just happened to the candid, sometimes profane notes of a pair of top Clinton aides who were on the administration's Whitewater "response team" when the scandal began heating up in January 1994. Last week former communications director Mark Gearan told the Senate Whitewater committee that he had at first thought his notes of meetings at the White House that January were not covered by a host of blanket subpoenas. But when a personal subpoena arrived from independent counsel Kenneth Starr late last year, Gearan, who is now director of the Peace Corps, dug them out and handed them over. Michael Waldman, a staffer on the Whitewater team, recently had a similar moment of discovery, suddenly turning up a two-inch stack of documents, he explained, "in the course of an office move."

These documents offer a revealing window into the fear and confusion that gripped the Clintons' staff -- and into the First Lady's state of mind -- as Whitewater refused to go away. The notes, some of which were made public last week and others of which were obtained by NEWSWEEK, show Mrs. Clinton was the last holdout against naming a special prosecutor. They also strongly suggest that she did not fully disclose to the staff the level of her involvement with Madison Guaranty, the failed savings and loan at the heart of the scandal.

The First Lady was deeply involved in White House damage control in early '94 -- a time when journalists and lawmakers in both parties were demanding a Whitewater special prosecutor. At the time, the Clintons and White House aides insisted they weren't preoccupied with the scandal. But as the notes make clear, Whitewater was all-consuming. At a meeting of the Whitewater response team on Jan. 7, Gearan's notes show, deputy chief of staff Harold Ickes -- possibly Mrs. Clinton's closest political adviser -- said it was "impossible" to get the First Lady to consider agreeing to a special prosecutor. Even her husband can't persuade her, said Ickes, referring to Clinton as "POTUS" -- the Secret Service code for president of the United States. (He referred to the First Lady as "FLOTUS.") At an earlier strategy session, Mrs. Clinton herself had walked into the room, coyly saying, "It looked like a meet-ing I might be interested in." Gearan, who had been faithfully documenting the conversation, abruptly stopped taking notes.

The Whitewater squad soon prepared proposed "talking points" for the president to handle the avalanche of press inquiries. Did Mrs. Clinton have a conflict of interest representing Madison before state regulators? According to files kept by Michael Waldman, who was helping handle press calls, the correct answer was "Absolutely not . . . As for the representation of Madison, Hillary represented them one time, in a limited fashion, on one matter, seeking to get a ruling of law."

The response -- cobbled together from old campaign statements -- was not accurate. When Mrs. Clinton's law-firm billing records were mysteriously discovered in the White House family quarters earlier this year, they showed that she had documented working for 60 hours for Madison on numerous matters that required state approval, as well as a questionable real-estate deal known as Castle Grande. Ickes, a tough-talking New York lawyer, was worried about the perception that Madison had gotten a special break from a state regulator, Beverly Bassett Schaffer. He wanted to send an emissary to see her in Arkansas. "If we f--- this up, we're done," said Ickes.

It is not clear just what Mrs. Clinton told the staff about her representation of Madison, but it was apparently not much. The First Lady was a stone wall that January. Gearan's notes tell how in the end the nation's senior diplomat, Secretary of State Warren Christopher, had to be dispatched to persuade FLOTUS to accept the inevitability of the special prosecutor.

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