no words with a crying emoji. sad stuff. thanks. i'm heather childers in for shepard smith. "your world" is next. have a great new year! bye-bye. >> the political story of the decade. >> a remarkable team to be a political journalist in washington d.c. >> we like our presidents to resonate with the majesty of the office. but they're human beings and fallible. >> we're looking at things that could be survived. >> lying will get you in trouble. >> massively disappointed and angry. you put risk with something like that. >> there's risk such as the constitution and risk as an impeachable offense. >> the truth will come out. the american public never heard about it. >> bill clinton and the media hand the country would never be the same.

>> between 1993 and 2001, washington was engulfed by endless scandals involving the presidency of william jefferson clinton. allegations of man deals, mysterious deaths, sexual misconduct and ultimately the subject version of justice fascinated america. paralyzed the political process and culminated in impeachment and trial of the president of the united states. sometimes, they move unseen, just below the surface. years later, the fault lines are still there. sometimes they are below the surface. hillary clinton's presidential

campaign of 2016. the same tools to go after the clintons now loom over the trump presidency. this is the story behind the greatest scandal of american presidents. long-forgotten. like most scandals, this one began small, in northern arkansas, where the white river meets crooked creek. ♪

>> "come see. see for yourself." ♪ >> i'm joe hicks, born and raised right here in this area. pretty well done this all my life. everybody that comes downriver will ask you, "where's whitewater?" or "where did the clintons have their place at?" >> before whitewater became synonymous with controversy, it was a straightforward investment opportunity in the ozarks. >> whitewater was a small real-estate development on the banks of the white river in marion county, arkansas. >> the whitewater development only had four business partners -- jim and susan mcdougal, bill and

hillary clinton. >> bill clinton is an arkansas boy from hot springs. and he runs for attorney general of arkansas, is elected. >> jim mcdougal was a longtime democratic party operative. >> he had been involved in politics. he had been a college professor. >> smooth-talking, raconteur, good old southern boys. you know, smart as a whip. >> he considered himself somewhat of a entrepreneur. he would buy land and develop them and then sell it. >> i met him at ouachita baptist university. and i had locked myself out. and i went over to his office and i said, "does your key fit this?" and he kicked the door down. and i should have known then. i should have said, "who does that?" >> jim did. that was the kind of man he was -- a southern gentleman with a little edge. >> jim was just bigger than life. yeah, we got married, i think, a few days after i graduated from

college. >> these two colorful characters, jim and susan mcdougal, were straight out of central casting. >> when jim got a job working for arkansas senator william fulbright, he hired a young man named bill clinton. >> jim just really loved him. not long after i met jim, up roars this great-looking convertible. and bill clinton jumped out and came over. and he started telling us this story of being in love with hillary. jim said, "this is for real, because he never talks about anybody like that." >> they became friends with the clintons, and so jim got the clintons to invest with him on a couple of little things. and then they came up with the whitewater estates. >> jim was always looking for property. and then we would go in and talk to the professionals in the area. and that would be chris wade and rosalee wade. >> the wades ran a small mom-and-pop operation in the foothills of the ozark mountains. >> they just came to our real-estate office and said that they were interested in developing property.

>> in 1978, chris wade offered jim a piece of undeveloped land in marion county -- price tag of $203,000. >> it was just some land on the bluff overlooking the white river. >> and he said, "let's just drive up and take a look at it." >> jim and susan fell in love with it. >> we get there, and there's water running through it. and the trees were really beautiful. it was quiet and serene. it was almost like looking at a cartoon of arkansas. >> jim was sold, but he needed some partners. >> actually, i got this piece of land up in the white river i'm gonna buy. you want to go in with me? i'll take care of setting the financing up. >> jim wanted to offer bill that opportunity to make maybe a few hundred dollars on it. it would be a little bit of a prestige that bill clinton owned a tract in whitewater. >> the two couples borrowed money from a local bank and put up a 10% down payment. that same year, 32-year-old bill clinton became the youngest governor in the country. the newly formed whitewater development corporation started

parceling out the land and selling lots. >> the idea was to take this big piece of property and puts roads in it. >> we did all the work, as far as doing the surveys and road-building. and jim and susan kind of worked on the marketing. >> but by 1980, things took a turn for the worse. bill clinton lost his re-election bid, and jim mcdougal quit politics. >> mcdougal and several others bought a bank over in west arkansas. and they loaned money to help the whitewater development. they made one loan in the amount of $30,000 in the name of hillary clinton. >> the loan was for hillary to build a model home on the property. three decades later, the house still sits on what is now a quiet, tree-lined street. >> it would just be a home for folks to come look at. >> but whitewater began to struggle. some blamed its remote location. >> if you didn't have a pretty rugged old pickup or something like that, you just almost couldn't even get in there. >> at the same time, interest

rates were skyrocketing. >> whitewater failed because jimmy carter was elected president, and interest rates went through the roof. >> so, for a long period of time, we did not sell a lot of the tracts. >> with no cash in hand and mortgages due, jim mcdougal dipped into his own pocket to pay off loans. at the time, he claimed that he was keeping the clintons in the dark. >> i was trying to carry the load because i was embarrassed and didn't want them to suffer. >> while mcdougal was struggling, bill clinton was busy moving back into the governor's mansion. >> and, once again, in '82, he was elected and stays the governor until 1992, when he was elected president. >> if you will raise your right hand... >> [ clears throat ] [ laughter ] >> meanwhile, jim mcdougal was busy expanding his banking business. >> so, mcdougal has this regular bank. well, in the meantime, in the early '80s, all across the united states, they have savings and loan associations. >> savings and loans were sleepy

little mom-and-pop banks. >> and they could do a lot more than banks. they were under less regulation, if you will. >> jim mcdougal bought madison guaranty savings and loan and began engaging in development loans, loans to help people build properties. >> there weren't a lot of rules in place, and you could loan on anything. >> as he did, he got in way over his head and began to engage in corrupt loans. >> suddenly, the de-regulation gates were open to loan money on anything and everything and to everybody. >> the savings-and-loan revolution freed up a lot of folks to buy into these s-and-l's and start lending practices that you wouldn't see at an ordinary bank. >> mcdougal took it from maybe having assets of $3 million in $100 million in a couple of years. but he's doing outrageous things. he's paying 10% interest on checking accounts. >> i don't think i ever saw a savings and loan as dirty as madison guaranty savings and

loan. now, in terms of total dollar amount, it was a drop in the bucket. but the self-dealing that went on there, the conflicts of interest were among the most brazen i had ever seen. >> to raise more funds, jim turned to former little rock municipal judge david hale. >> david hale ran a small business administration-backed lending company called capital management. >> if somebody invested $500,000 in mr. hale's company, the sba would match that like 3-to-1. they would give hale $1.5 million. >> he was supposed to use the money for the impoverished, but, instead, he was charged with using it to help friends of the clintons. >> hale's capital management services a $300,000 loan to susan mcdougal. >> it literally was signing and then signing. and i said, "is that all there is to this?" and, you know, he handed me this

check. i don't know why i did, except that jim was a really good salesman. >> but the loans would not be enough to save madison savings and loan. >> in the mid-'80s, the savings and loans began to drop like flies. >> by march of 1989, madison had failed, requiring a $60 million taxpayer bailout. jim mcdougal had also bottomed out. susan had left him, he had been hospitalized for manic depression, and he was facing potential jail time. perhaps foreshadowing how politically toxic jim would soon become, the once-close friendship with bill clinton deteriorated. >> the relationship that once seemed so promising ended formally in 1992. >> just as clinton's star was rising. >> today, i proudly announce my candidacy for president of the united states of america. [ cheers and applause ] great news, liberty mutual customizes-

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i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. >> we're not interested in the old labels of liberal and conservative and left and right. we want an america that works again. >> when bill clinton entered the race for the 1992 democratic nomination, he joined four other major candidates -- among them, senators paul tsongas and bob kerrey. >> clinton was clearly the best-prepared. i mean, bill clinton was ready. >> although not the early front-runner, he came out of the gate with youthful energy and surprising support. >> we can win again if we've got the guts to be one again. i need your help. let's go win this election.

thank you very much. >> there was a lot of excitement among democrats. they had been out of power for 12 years, and here was this young upstart governor from arkansas. came out of nowhere. >> but on january 17th, just before the all-important iowa caucuses and new hampshire primaries, the first clinton scandal erupted. >> i was bill clinton's lover for 12 years. and for the past two years, i have lied to the press about our relationship to protect him. now he tells me to deny it. >> clinton and his wife, hillary, are hoping to deal decisively with the gennifer flowers story. >> [ chuckles ] >> your thoughts. >> she didn't tell the truth. i have been in new hampshire and mississippi and louisiana, allowing real voters -- i can't find any citizen who will ask me a question about this. >> an air of crisis is hovering over the clinton campaign. >> the campaign's response would foreshadow the clinton playbook on scandal management -- deny and return fire. >> all i can tell you is -- it isn't a true story. i've read the article.

it's not true. >> same old cash to trash. >> damage control kicked into high gear january 26th, when, following the redskins' victory over the buffalo bills in super bowl xxvi, millions of americans tuned into "60 minutes." >> i have acknowledged wrongdoing. i have acknowledged causing pain in my marriage. >> if that's not enough for people, then, heck, don't vote for him. >> the thing that saved bill clinton and allowed him to become president was the "60 minutes" interview with hillary. she reached out in the ocean and grabbed him and brought him back. >> can't make that up. i mean, he hit a long-ball home run. >> mainstream news organizations were digging into bill clinton's record and his past, and the clinton camp was very much on the defensive. >> i think that the matter is closed. >> they did not want embarrassing stories that would get in the way of their march to the white house. >> february brought fresh controversy over bill clinton's

vietnam draft deferment. >> after using a deferment long enough to avoid the draft, clinton backed out of his deal to join the rotc program. clinton called the charges "a tired, old story." >> the character questions chipped away at clinton's poll numbers. less than a week before the new hampshire primary, he suddenly trailed by double digits. >> if you didn't finish first or second in new hampshire, it was over. >> bill clinton! >> but bill clinton wouldn't go down without a fight. his back against the wall, he surged to a second-place finish in new hampshire. >> new hampshire, tonight, has made bill clinton the comeback kid. [ cheers and applause ] >> with his new momentum, a wave of national reporters descended on little rock, arkansas. >> he was the democratic front-runner. so digging into who he was and into his past was a key part of what we do. >> march of '92, there was an article on the front of

the new york times,written by jeff gerth. >> it was very hard to decipher exactly what there was, but there did seem to be a lot of unanswered questions that only grew because of the fact that they didn't want to release all their records about their dealings with the mcdougals. >> it is embarrassing. that embarrassment caused him to be reluctant to release the records. >> so that only increased the suspicions that many people in the press had that they were hiding something. >> my boss said, "have you seen this article? i would like you to go to little rock and determine whether or not whitewater caused a loss to madison guaranty and the u.s. taxpayers. >> jean lewis was an investigator with the resolution trust corporation, the rtc. >> the resolution trust company, which was sort of under the jurisdiction of the treasury department, was conducting investigations into savings-and-loan fraud all

around the country. >> and she was the one, really, who uncovered the problems at madison guaranty savings and loan. >> the fact that the clintons were mentioned in the article made it important, because the possibility existed that their actions may have caused a loss to the u.s. taxpayers by virtue of their action with this real-estate deal. >> as jean lewis started her digging, the article went largely unnoticed. meanwhile, bill clinton was on the path to becoming his party's nominee and eventually doing what many thought impossible -- taking down a popular incumbent president. [ cheers and applause ] >> the people have spoken, and we respect the majesty of the democratic system. >> i still believe in a place called hope. god bless america. thank you all. ♪

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mr. trump inviting congressional leaders to the white house tomorrow. this comes as house democrats plan to vote on funding bills on thursday which do not include the money president trump wants for a border wall. and the family of a retired u.s. marine arrested in russia says that he was in moscow for a wedding. a russian federal security service says that 48-year-old paul wheland was caught in a espionage operation. if convicted, he can face 20 years in prison. i'm heather childers. now back to "scandalous." >> congratulations. [ cheers and applause ] >> bill clinton's presidency, i think, was regarded as pretty normal. we were shifting from republican to democrat, which this country tends to do. >> he brought with him a strong democratic majority in both houses of congress. >> he also brought with him a number of friends from arkansas. >> there's a thing that happens with presidents who are not from washington. and that is, they've got a team

from their home state, and this is the team that got him elected. so, who's gonna tell them that they don't know what they're doing? >> many of them came from the rose law firm. >> the rose law firm was a prominent little rock, arkansas, law firm. it was prominent because it had a lot of great lawyers, and among them were hillary clinton. >> there were two men who mentored hillary and guided her and smoothed her path. one was webb hubbell, and the other was vince foster. >> webster hubbell is a very accomplished lawyer. he was on the arkansas supreme court. >> vince foster also partnered at the rose law firm. very close with mrs. clinton in particular. >> foster would be probably the main litigator in the rose law firm. he'd been president of the bar association. but he's probably the most highly thought-of lawyer in the whole group. when president clinton was elected, they asked mr. hubbell and mr. foster and another rose lawyer, bill kennedy, to go to washington with them. >> hillary clinton, obviously, became the first lady of the united states.

>> webb hubbell had the number-three position in the justice department. it was called associate attorney general. >> vincent foster went to washington as both the clintons' personal lawyer and the deputy white house counsel. >> along with vincent foster and webster hubbell, some notable figures would also feature prominently in president clinton's first term. bernard nussbaum, a well-respected attorney, who had been part of the congressional staff investigating the watergate scandal, became white house counsel. george stephanopoulos, who had run communications for the '92 campaign, became white house communications director. and florida state attorney janet reno was appointed u.s. attorney general, after controversies forced two earlier candidates to bow out. >> it looked like a relatively normal presidency, but his first 50, 100 days were pretty stormy. >> it was an explosion of extraordinary magnitude that ripped through the underground garage beneath the huge world trade center complex. >> february 26, 1993, a truck bomb tore through new york's

world trade center, killing six and injuring 1,000. [ gunshots ] two days later, a bloody shootout erupted after agents from the bureau of alcohol, tobacco, and firearms raided a compound near waco, texas. inside, a sect of seventh-day adventists called the branch davidians had been suspected of weapons violations. [ gunshots ] >> before noon, four government agents and six branch davidians dead. >> the tense standoff continues with little sign of resolution. >> the ensuing standoff dragged on for 51 days, until april 19th. that morning, the fbi launched a tear-gas assault on the compound as shots rang out from inside. a fire soon spread, and 76 branch davidians never made it out. while america watched the crisis at waco unfold, trouble of a different sort was brewing in washington. inside the old executive office

building is the small unit that handles last-minute travel for the president and the media who accompany him. >> the travel office was an office within the white house. if we're going on air force one somewhere, we're gonna take 25 media. >> but citing corruption and bad management, the new administration wanted to clean house. >> there was a young lady working at the white house by the name of catherine cornelius that it's been reported that she was the second cousin of bill clinton. and she wanted the job. >> billy dale and the six members of his staff, most of whom had served for the presidencies of ronald reagan and george h.w. bush, were suddenly dismissed without warning. >> the press complained to me, repeatedly, about being gouged by the white house travel office. now, if it wasn't handled right, we'll get to the bottom of it. >> that was bad business, and it smelled bad. and the new people did a lousy job. >> last weekend, we were able to have about a 25% reduction in the travel cost -- >> it wasn't the same service.

now, you know it wasn't the same service. we know it wasn't the same service. how come he didn't know that? >> well, i think the same travel service. i think that they're -- >> earth to george. it was an ugly episode. >> the white house would backpedal, issue apologies, and chalk it up to "inexperience." but, years later, a memo would surface written by white house staffer david watkins. >> he said, "there would be hell to pay" from the first lady if we didn't do this. mrs. clinton's position -- she had no role in that. there was evidence to the contrary. ultimately, it was concluded that you couldn't charge her with not telling the truth about that. >> in the press, the situation became known as travelgate. >> one of the worst things the media ever did was to attach the word "gate" to every political sin that any administration committed. travelgate was a lot of nothing, but when you put the word "gate" on it, people think, "aha. it must be a crime the way watergate was a crime." >> but it focused a lot of media attention on the inner workings

of the west wing. >> it became a subject of continual reporting, especially bythe wall street journal,on its editorial page. >> particularly on people like deputy white house counsel vince foster. >> he was kind of being a scapegoat on the travel-office firings. like, "who is vince foster?" foster had a very good reputation before he went to washington. all of a sudden, he's in the limelight. >> one of the things that bothered foster is that the journalwas raising questions about what was going on there. >> this is really spooky. foster clearly is depressed. >> white house spokeswoman dee dee myers has confirmed that the president telephoned foster, inviting him to the white house to watch a movie on the evening of the 19th. >> foster declined to come. the movie, "in the line of fire," stars clint eastwood as a secret service agent. and the question throughout the movie is, "are you willing to step into the line of fire to protect your president?"

>> july 20, 1993, was a busy day. supreme court nominee ruth bader ginsburg began her confirmation hearings before the senate judiciary committee on capitol hill. >> my approach, i believe, is neither liberal nor conservative. >> in little rock, the fbi obtained a search warrant for the office of david hale's capital management services. and in the white house rose garden, president clinton announced a major nomination. >> good morning. please sit down. >> just one day earlier, bill clinton had become the first president in history to fire a sitting fbi director, after william sessions refused the opportunity to resign over ethical-misconduct allegations. >> today, i am pleased to nominate a law-enforcement legend to be the director of the fbi, judge louis freeh. >> in the aftermath of the waco disaster, the appointment of a new fbi director was meant to bring some calm to the justice department and to embattled attorney general janet reno.

around noon, vince foster returned to his office in the west wing. he was seen by white house counsel bernard nussbaum and by three assistants, including one whose part in the greater story wouldn't become clear for another five years, a woman named linda tripp. tripp would later tell investigators that foster seemed preoccupied. she brought him lunch in his office, and before leaving the office, without his briefcase, he said, "i'll be back." the events of the next 12 hours may forever be clouded in mystery, but they are the catalyst that would lead from the whitewater land deal to one of the wildest political stories of all time.

♪ >> after leaving his office in the west wing on july 20, 1993, deputy white house counsel vince foster got in his 1989 honda accord and drove to fort marcy park on the virginia side of the potomac river. at some point, foster exited his car and walked into the park

towards a pair of civil war cannons. on a nearby slope, he pulled out a .38-caliber revolver. >> and he put the gun in his mouth, shot himself, and then he fell back. >> it wasn't until shortly after 6:00 p.m. that authorities arrived at fort marcy park. that timeline and the accounts of the various witnesses would become a point of contention for years to come. at the white house, when news of foster's suicide reached chief of staff mack mclarty, president clinton was in the middle of a live television interview with larry king. mclarty phoned the first lady, who was visiting her parents in little rock, and told her the news. when the television interview ended a short time later, the president learned of the death of his childhood friend. both clintons were shocked and heartbroken by the news. >> he was atticus finch. he was kind. he was loving. he was a quiet man who believed in the law.

>> the original investigation was done by the park police. they concluded it was a suicide. a lot of people said, "oh, no. he couldn't have committed suicide. he must have been murdered." >> a cottage industry of conspiracy theorists would later parse every detail and allege all sorts of wrongdoing. >> there were all kinds of crazy theories. he was murdered in the white house and rolled up in a carpet. he was murdered in the saudi embassy next door. >> i had forensic experts, including, among others, the chief medical examiner from new york, charles hirsch. he had a word for something like, "it is my unequivocal, categorical opinion that it is 100% impossible that he was murdered." >> we spent years looking into everything. the overwhelming weight of the evidence is that mr. foster committed suicide in fort marcy park. >> multiple investigations, all concluding the death was

suicide, did little to silence the conspiracy theorists. >> i was asked within the last month by someone, "you don't think foster killed himself, do you?" and i said, "yes. we're convinced." >> the right wing did not like that. they wanted to believe it was murder. >> what the american public wouldn't know for many months was that the tragic death of the president's old friend was only part of the story that night. the response inside the white house and the legal and political maneuvering in the hours and days to come would put the presidency in danger. ♪ >> the intrigue and the hustle-bustle of the white house came to a halt today. president clinton canceled his public schedule after learning the tragic death of his childhood friend and white house lawyer vincent foster. >> the president shared a private moment in the west wing with his senior staff and then stepped into the rose garden to address the nation. >> and it is very important that his life not be judged simply by how it ended, because

vince foster was a wonderful man. >> that changes everything. it changes the white house. it changes the clintons. >> there seemed to me to be a terrible cloud everywhere. >> vincent foster was a lifelong friend of president clinton's, and mr. clinton returned to arkansas for the funeral service. >> in the meantime, he's asked the justice department to coordinate the investigation of this tragedy. >> but on the night of the suicide and the days that followed, that investigation would be complicated by disputes over the contents of foster's office and who had access to it. >> vincent foster has died. the president has been informed. mrs. clinton has been informed. people then start visiting vincent foster's office in the white house. >> there was evidence that documents were removed from foster's office. >> the white house counsel, bernard nussbaum, presidential aides, mrs. clinton's aides start removing documents. now, what's going on with that? >> the park police wanted to come in and search the office

for his papers. >> mr. nussbaum is denying them access. >> his position was, "i'm just trying to do what any lawyer would do to protect the interest of their client." >> but what are those records? you know, are they relevant to madison? are they relevant to whitewater? what are those? >> the behavior of the president's aides would lead to years worth of unanswered questions about the nature of the documents that had been in foster's possession. but while some things were removed from the office, others seemed to suddenly appear. >> six days after mr. foster's death, a torn-up note is found in the bottom of his briefcase. >> vince foster's handwritten letter of distress before his suicide was found in a briefcase in his white house office, torn into more than two-dozen pieces. >> white house press secretary dee dee myers says the note appeared to confirm suicide because of despair about his high-pressure job. >> it did show him to be in a distressed state of mind, a troubled state of mind, per work.

>> the note read, "i was not meant for the job of the spotlight of public life in washington. here, ruining people is considered sport" and that "the public will never believe the innocence of the clintons and their loyal staff." >> one of the jottings on the note was "the wall street journal editors lie without consequence." on july 22nd, the wall street journal publishes another editorial concerning mr. foster. it's called "a washington death." it says, "the death is a tragedy, but we owe it to mr. foster to find out what's going on. essential for pine trees, but maybe not for people with rheumatoid arthritis. because there are options. like an "unjection™". xeljanz xr. a once-daily pill for adults with moderate to severe ra for whom methotrexate did not work well enough. xeljanz xr can reduce pain, swelling and further joint damage, even without methotrexate. xeljanz xr can lower your ability to fight infections, including tuberculosis.

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>> when the story linking the clintons to jim mcdougal, the owner of the failed madison guaranty savings and loan, was first published, in march 1992, it had gone largely unnoticed. >> didn't amount to a hill of beans at that point in time. nobody was really paying attention to it. >> nobody but jean lewis, an investigator for resolution trust corporation, who had been digging through madison's files in an arkansas warehouse. >> i identified the 12 accounts that had funds flowing between them, all of which touched a combination of people -- jim mcdougal, susan mcdougal, jim guy tucker. >> jim guy tucker is the former lieutenant governor and became governor after governor clinton

became president clinton. >> in order to pay bills for these 12 different entities, either jim mcdougal or one of his employees would write a check from account a to account b, creating the appearance of money that did not exist. >> lewis wrote the first of many criminal referrals related to mcdougal's savings and loan and sent it to federal prosecutors. but it went nowhere. >> we ultimately, in october of '93, received a letter from paula casey, the new u.s. attorney in the eastern district of arkansas. that letter stated, "we are declining your madison guaranty referral." >> meanwhile, the country was transfixed by drama unfolding on the other side of the world. on october 3rd, united states army rangers and elite delta force operators had set out on a mission to capture a corrupt warlord in mogadishu, somalia.

things went bad fast. the horrific images of what became known as "black hawk down" were broadcast worldwide. while america watched in horror, jean lewis, at the rtc, was still hard at work, sending nine new criminal referrals to the u.s. attorney's office. on halloween day, 1993, the washington postreported on the referrals and their links to the clintons. >> there was nothing standard about the investigation of madison guaranty savings and loan, and i think a lot of that was attributable to the fact it was politically charged, because it identified bill and hillary clinton. >> three days later, associate attorney general webb hubbell, former law partner of hillary clinton, recused himself from all whitewater matters. suddenly, the questions surrounding whitewater were landing on the front page. >> when investigators were barred from foster's office, there was suspicion aides were hiding documents about the

clintons' involvement in a failed arkansas land deal called whitewater. >> two days before christmas, 1993, with criticism growing and a subpoena looming, the white house agreed to turn over some whitewater documents to the justice department. ♪ as questions related to whitewater continued to hound the administration, republicans called for attorney general janet reno to appoint an independent counsel. but it had been a republican filibuster in congress that had let the independent-counsel statute expire, after g.o.p. discontent with the iran-contra investigations of the 1980s. >> people, including democrats, came to realize that the statute was a terrible mistake, that it made politics into a crime. >> so reno refused, arguing that it was up to congress to re-enact the statute, after which a three-judge panel could appoint a indepedent counsel. >> and she said, "since i report to the president, there would be an appearance of a lack of

independence. if you want an independent counsel, you re-enact the statute. >> at that particular time, whitewater seemed to be to be a relatively small issue, but the only way to get it out of the way was to get somebody to come in and investigate, actually, what happened. >> in january 1994, the calls for a whitewater investigation followed president clinton overseas as he attended an international summit on arms control and nonproliferation. but the international diplomacy was overshadowed by questions from back home. >> finally, it got to the point where the politically smart thing to do became the appointment of a special counsel. >> the president, today, has directed white house counsel bernard nussbaum to request the attorney general to appoint a special counsel. >> after the announcement, reno said she would honor the president's request. >> it is important that public confidence be preserved. thus, i do not think we can wait until the independent-counsel statute is re-enacted. >> she appointed what they call a regulatory independent counsel

named bob fiske. this is the same as bob mueller is today. >> i was looking for someone who would be fair and impartial, and i think mr. fiske fits that description to a "t." >> she basically said, "do you have all the authority you need?" and i said, "yes." and she said, "thank you very much for doing this, and i won't be talking to you again until this is over." >> the investigation of whitewater was the beginning of what i call the criminalization of political differences. >> he doesn't just get the ability to ask questions. he gets a fishing license. he can go into anything. >> i'm gonna take a leave of absence from my law firm so that i can conduct a complete, thorough, and impartial investigation. >> i expect him to report to the american people and i do not expect to monitor him. >> fiske also opened a new investigation into vince foster's death, utilizing fbi resources and a panel of distinguished forensic experts. >> all of a sudden, i was, for

all practical purposes, the attorney general of the united states for one of the most high-profile investigations ever. i had no office. i had no staff. i had nothing. >> the move, at first, appeased senators on both sides of the aisle. >> if the president and the first lady have nothing -- have done nothing wrong, as they say they have, they should have nothing to hide. >> the clintons seemed unfazed by fiske's inquiries. yet, they were unaware that a ghost from bill's gubernatorial past was looming on the horizon and would soon cast her indelible shadow across the entire west wing. you always pay your insurance on time. tap one little bumper and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect.

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>> the story was written and researched by a conservative reporter named david brock, who had made a name for himself two years earlier by attacking anita hill during the clarence thomas supreme court hearings. >> well, it was a right wing body of opinion, which didn't like bill clinton and which was hell-bent to go after him. >> with backing from billionaire richard mellon scaife in pittsburgh, thespectatorhad begun a nonstop assault on the clintons that they internally referred to as "the arkansas project." the initiative began in the days following the death of vince foster in the summer of 1993. but the troopergate article raised the stakes. >> there was a great pushback from the clinton white house and its defenders. one of the lines that was used by the clinton camp is, "if this is really all true, where are the women?" >> it was two sentences buried deep within the article that would prove to be the biggest bombshell. brock wrote clinton had eyed a woman at a reception at the

excelsior hotel in downtown little rock. he asked the trooper to approach the woman, tell her how attractive the governor thought she was, and take her to a room in the hotel where clinton would be waiting. while only identified by her first name in thespectator,two short months later, in february of 1994, the world would know the story of paula jones. ♪ on the next episode of "scandalous"... >> and this is paula jones. >> he started to put his hand and slide it up my legs. >> if foster may not have committed suicide in fort marcy park the body may have been moved. >> it became yet another grist for the mill of people who wanted to accuse of the clintons of horrible things, including murder. >> he said, "you won't believe this, but you have been replaced by ken starr." >> so, that's how it began, with a phone call in the early summer of 1994. >> the stack of papers suddenly reappeared in the white house book room. >> i would like to know how

those documents showed up. >> oh, please. really? ♪ >> previously on "scandalous"... >> jim and susan mcdougal were straight out of central casting. >> jim got the clintons to invest with him in the whitewater estates. >> whitewater failed. >> jim mcdougal bought madison guaranty savings and loan. >> savings and loans began to drop like flies. >> here was this young upstart governor from arkansas. came out of nowhere. >> i still believe in a place called hope. >> president clinton canceled his public schedule after the tragic death of his white house lawyer vincent foster. >> there were all kinds of crazy theories. >> whitewater was complicated. >> the politically smart thing to do became the appointment of an independent counsel. >> the president, today, has directed the attorney general to appoint a special counsel. >> she basically said, "i won't be talking to you again until this is over." >> there wal