The Honorable James A. Leach
Page 2

to obtain such information on the understanding that we will preserve its confidentiality, disclosure would impede our ability to obtain it in the future. Therefore, any such confidential material would have to be redacted from these documents before they could be made available.

Additionally, there may be some documents that contain privileged intra-agency communications. Although this does not necessarily require withholding entire documents, we need to avoid waiving such privileges as may reside in these documents.

As to supervisory and examination materials, we believe it essential to protect the confidentiality of sensitive information concerning insured institutions. Existing OTS policy is not to release such materials, except under very limited circumstances. There are two reasons for this. First, the confidential nature of the examination process facilitates the free flow of information between savings institutions and examinera. Second, examiners are encouraged to express freely their conclusions to their supervisors about examined institutions, and the confidential nature of the reports permits them to do so. As the United States Court of Appeals for the District of Columbia Circuit recently said,

Bank management must be open and forthcoming in response to the inquiries of bank examiners, and the examiners aust in turn be frank in expressing their concerns about the bank. These conditions simply could not be not as well if communications between the bank and its regulators were not privileged.

In re Subpoena Served Upon the Comptroller of the Currency, 967 F.2d 630, 634 (D.C. Cir. 1992) (estations omitted).

You also requested the names and titles of all OTS employees involved with the examination and supervision of Madison as well those who were assigned to work with the RTC when the institution was closed in 1989. We will provide the names and titles of these employees. However, because of the need to preserve the

confidentiality of the examination process, before you conduct any interviews of them, we will need to determine the appropriate scope of these interviews.

The Ronorable James A. Leach
Page 3

Ne recognize, as did your December 17 letter, that there are issues regarding whether the Freedom of Information Act exemptions apply to your request. In order to reduce the number of documents over which we may disagree and in order to make any redactions as expeditiously as possible, I suggest our staffs discuss the general categories of documents in OTS' possession. If possible, it might be mutually beneficial to determine which, if any, documents ve hold that are not germane to your inquiry. We may then organise our review of the documents in a manner that best addresses your priorities.

I hope this is responsive to your request.

RTC

RESOLUTION TRUST CORPORATION

Resolving The Crisis
Restoring The Confidence

December 22, 1993

The Honorable James A. Leach

Ranking Minority Member

Committee on Banking, Finance & Urban Affairs

U. S. House of Representatives

Washington DC 20515

Dear Jim:

I am writing in response to your letter dated December 9, 1993, requesting that the Resolution Trust Corporation provide certain documents and records for the House Banking Committee Minority investigation of the failure of Madison Guaranty Savings and Loan Association located in M'Crory, Arkansas. Madison Guaranty is an institution in receivership with the RTC.

Let me reassure you that the RTC will thoroughly cooperate in this investigation.
Indeed, it was the RTC which originally referred this matter to the Justice
Department. RTC staff has been instructed to assemble the relevant documents,
which are voluminous, as quickly as possible.

Ideally we would forward all of these materials to you today, and I expect to supply most of them in short order. I am advised by the RTC General Counsel, however, that there may be limits on our ability to provide certain of them. These limits involve the Privacy Act and legal privilege or other restrictions on the ability of the RTC to release them. This will have to be coordinated with the Justice Department. I have instructed the RTC staff to work with your staff on appropriate procedures for handling these issues.

801 17th Street, NW Washington, DC 20434

Sincerely,

Roger C. Altman
Interim CEO

am in receipt of your February 1, 1994 response to the letter
initiated by Senate Republican leadership concerning Madison
Savings and Loan and I am pleased to learn that the RTC "will
vigorously pursue all appropriate remedies" with regard to
Madison's failure. It seems self-apparent that in order for the
RTC to pursue vigorously all remedies it must have all relevant
information at its disposal. Accordingly, I urge the RTC to seek
and review all Whitewater Cevelopment Corporation documents turned
over by the White House to the Justice Department.

In its investigation of Madison, the Minority has uncovered links
between Madison and Whitewater, some of which may have contributed
to the thrift's failure. Not only did James and Susan McDougal
hold significant ownership interest in both entities (approximately
two thiras in Madison and one half in Whitewater), but the other
joint owners of Whitewater (9ill and Hillary Clinton) appear to
have benefited directly and indirectly from the application of
Madison resources. (See the attached memo.]

If the White House chooses to use the Justice Department to shield
Whitewater documents not only from the public and Congress, but
from other government agencies, such as the RTC, which have
Legitimate public law enforcement responsibilities, it is hard to
believe a responsible resolution of the issues involved can be made
by regulatory authorities.

I have high regard for your personal integrity, but as you know,
from the beginning, it has ceen an awkward situation to have a
presidentially appointed and confirmed officer of the Treasury
Department also head an independent federal agency, the Resolution
Trust Corporation (RTC). When this prospect was first suggested at
the beginning of the Clinton dainistration, it did

Mr. Roger C. Altman
Page 2

February 3, 1994

not strike the Minority as overly unreasonable for a month or two given the fact that no RTC head had been selected.

However, it has been over a year since the Administration has been in office and it can only be described as structurally unseemly for a political appointee of an Executive branch department to make what are in effect, law enforcement decisions for an independent federal agency as they may touch upon the President.

Accordingly, I would urge that you request from the Department of Treasury's General Counsel and Ethics office advice as to whether you, as interia CEO of the RTC, are obligated to recuse yourself from any decisions concerning the resolution of Madison Guaranty. Just as the special counsel lay was designed to relieve the Attorney General from an ethical dilemma of being both chief law enforcement officer for the nation and chief legal advisor to the President in circumstances when the President or a high level Administration officer is the subject of investigation, so it would appear ethically questionable for a political appointee of the Department of Treasury to make decisions for an independent federal agency when the President may be implicated in enforcement and civil actions.

In this regard, it should be clear that the issue is not whether a presidentially appointed official can oversee an investigation involving the President. Rather the issue is that officials with this responsibility should be confirmed for the job with that particular accountability. As you will recall it was a political appointee confirmed by the Senate that issued a cease and desist order for engaging in conflicts of interest against the son of a former President.

As you know, despite your strong letter to the Chairman of the House Banking committee recommending against extension, Congress Last year extended the statute of limitations for civil lawsuits brought against S&L wrongdoers. As you pointed out in your most recent letter, this extension "has afforded the RTC an opportunity =0 investigate further any civil claims which may be asserted against individuals or entities associated with Madison Guaranty for fraud, intentional misccnauct resulting in unjust enrichment, or intentional misconduct resulting in substantial loss to the institution." Given, however, the impending running of the statute of limitations for certain kings of actions, time is clearly of the essence for the RTC to make judgments about civil accountability ir the failure of Madison:

Finally, I would like to reiterate my request, pursuant tr and XI of the House Rules or 111 documents related . Suaranty Savings and Loan, la Rock, Arkansas.

As you