Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, February 18, 1994                   TAG: 9402180212
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A5   EDITION: METRO 
SOURCE: The Baltimore Sun
DATELINE: WASHINGTON                                LENGTH: Medium

CLINTON FIRM CLEARED ON S&L ROLE

After conducting an internal review, the Federal Deposit Insurance Corp. said it was unclear whether the Rose Law Firm revealed to the government that it had represented the failed thrift, Madison Guaranty Savings & Loan, before state regulators in the mid-1980s. The regulatory agency said it would have expected a complete written disclosure in light of the firm's previous work for the S&L.

But, finding no violation of federal conflict-of-interest policies - policies the FDIC says were not as strict before 1990 - it recommended no sanctions against the law firm.

Questions surrounding Rose's hiring by the government, which paid the firm $400,000 in fees and expenses, are among many to come to light in the Whitewater-Madison controversy being investigated by a special counsel, Robert Fiske Jr.

President Clinton said Thursday that most of the investigation into the Whitewater land deal "has nothing to do with me." He and his wife entered into the deal with a friend, who later became the owner of Madison.

He told reporters that he had reluctantly urged Attorney General Janet Reno to appoint a special counsel so that "I wouldn't have to fool with it anymore."

But he said that decision "is going to cost the taxpayers millions of dollars, because what they did was shut down the investigation that was ongoing of the S&L issues down there."

Fiske, who has set up shop in Little Rock, Ark., persuaded a federal judge Wednesday to convene a grand jury solely to investigate the Whitewater matter.

The Rose Law Firm figures prominently in the investigation. Among former employees of the firm are Hillary Clinton; the late deputy White House counsel, Vincent M. Foster Jr., who committed suicide last summer; and Associate Attorney General Webster Hubbell.

After a report in the Washington Times last week alleged that Rose employees had witnessed the shredding of Whitewater documents - an allegation that attorneys there denied - Fiske ordered the law firm not to destroy any printed or computerized material that could pertain to his Whitewater investigation.

And in tangential matter, the FDIC ruled Wednesday that Hillary Clinton had no conflict of interest when she represented the government in a case against Dan Lasater, a former Clinton supporter. The agency found that she had done just two hours of work in the case against Lasater, a bond trader with ties to a failed Illinois S&L.

Meanwhile, the FDIC said Thursday that there was no evidence that Hubbell, the former Rose partner who is now the No. 3 official at the Justice Department, misled the agency when it hired the law firm in 1989 to sue Madison's accountants. The suit was an effort to recover some of the $47 million to $60 million in taxpayer losses that resulted from Madison's collapse.

Federal regulations generally forbid law firms to represent the government in cases against S&Ls for which the firms have done significant work in the past.