Madison Guaranty

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Madison Guaranty Savings and Loan Association was a savings and loan association in Little Rock, Arkansas that operated from 1979 to 1989. Three years after Madison's failure and seizure by Federal regulators, Madison in the 1992 presidential campaign became nationally known for its connection to Bill and Hillary Clinton because of reporting by Jeff Gerth of The New York Times. After Clinton's election as president, Madison was the subject of Congressional and special prosecutor investigations as part of the Whitewater probe.

Madison received a state savings and loan charter from Arkansas in 1979 as Woodruff County Savings and Loan. [1] It was a stockholder-owned institution as opposed to the many mutual (depositor) owned savings and loans that existed at the time.[1] From June 1979 to December 1981, assets grew from $2.6 million to $3.8 million.[1]

An audit by the Federal Home Loan Bank Board in April 1982 found substantial losses and questioned the solvency of Madison.[1] Later in 1982, Madison was acquired by James B. McDougal and Steve Smith.[1] The thrift continued its rapid growth, increasing in assets from $6.7 million at the end of 1982 to $48.6 million in 1986.[1] In 1983, McDougal and his wife, Susan McDougal, took control of the institution.[1] Federal regulators in a 1984 audit found the thrift was making unsound loans and if paper losses were realized, Madison would be insolvent.[1] In August 1986, the thrift's regulator, the Federal Home Loan Bank Board, ordered McDougal's removal from management of Madison but he continued to own it.[1] In 1986, Madison's assets peaked at $125.5 million.[1] The Federal Home Loan Bank of Dallas on December 29, 1988, requested the Federal Home Loan Bank Board to appoint the Federal Savings and Loan Insurance Corporation as receiver of Madison.[1] Madison was seized by Federal regulators on March 2, 1989.[2]

On April 14, 1997, Jim McDougal was convicted of 18 felony counts of fraud conspiracy charges. The counts had to do with bad loans made by Madison S&L.

This S&L was partnered with Whitewater Development Corporation, the subject of Whitewater probe and owned, in part, by Bill and Hillary Clinton.

Madison Guaranty and McDougal hired the Rose Law Firm where Mrs. Clinton worked as a defense attorney. Mrs. Clinton's Rose Law Firm billing records on Madison Guaranty and McDougal's Castle Grande project, which she called IDC (Industrial Development Corporation), could not be found. How much work she actually did on Madison and Castle Grande was the subject of the missing billing records. McDougal also held a fundraiser at Madison Guaranty that paid off Clinton's campaign debt of $50,000. Madison cashier's checks accounted for $12,000 of the funds raised.

Madison employees in the Starr Report[edit]

  • John Latham: former Madison Guaranty CEO
  • Robert W. Palmer: former Madison Guaranty land appraiser
  • Larry Kuca: former head of Madison Financial, a subsidiary of Madison Guaranty. Larry pleaded guilty on July 13, 1995, to one misdemeanor count of conspiracy to misapply the funds of a loan from Hale's company.[3]


  1. ^ a b c d e f g h i j k James R. Barth & R. Dan Brumbaugh, Jr., "The Condition and Regulation of Madison Guaranty Savings and Loan Association in the 1980s: A Case Study of Regulatory Failure," Research in Financial Services Private and Public Policy 8:73-96 (1996).
  2. ^ Donald McCarthy, "The Savings and Loan Crisis: Five Illustrative Case Studies," in The Savings and Loan Crisis: Lessons from a Regulatory Failure, edited by James R. Barth, Susanne Trimbath, and Glenn Yago (Santa Monica, Cal.: Milliken Institute, 2004).
  3. ^ blue line Caught in the Whitewater Quagmire, By Marilyn W. Thompson,Washington Post Staff Writer, Monday, August 28, 1995; Page A01

References and external links[edit]