  (5.67a/IDA-1.5 for conspire-post@firefly.prairienet.org); Sun, 25 Sep 1994 20:30:32 -0500
Subject: Conspiracy Nation -- Vol. 2 Num. 24


              Conspiracy Nation -- Vol. 2  Num. 24
             ======================================
                    ("Quid coniuratio est?")
 
 
-----------------------------------------------------------------
 
L.J. DAVIS INTERVIEW
 
L.J. Davis, author of an article offering a good look beneath the 
surface of Arkansas politics ("The Name of Rose", *The New 
Republic*, April 4, 1994), was interviewed by phone by David Inge 
of the local PBS-connected radio station on August 4, 1994. What 
follows is my transcription of that interview.
 
 +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +
 
[...continued...]
 
DAVID INGE:
There is this question -- and perhaps eventually it will be 
resolved -- about whether or not federal money that was earmarked 
to help bail out the S&Ls somehow managed to go into the Clinton 
campaign fund. Is that something that you have any insight on, or 
you think at some point there will, indeed, be an answer to that 
question?
 
 
L.J. DAVIS:
I think that there probably already exists an answer to that 
question in the examination reports in the RTC [Resolution Trust 
Corporation]. In order to find this out, however, the senators 
and congressmen are going to have to stop posturing and start 
asking the right sorts of questions.
 
               -+- Charles Keating Did It -+-
 
Federal money (to the tune of, according to one very reliable 
estimate) that was poured down the ratholes of the S&Ls in the 
1980s, may have eventually cost the country 2 trillion bucks, or 
approximately the cost of World War II. So remember, they are 
federally insured funds that we're dealing with.
 
And then there was also the possibility of a bank like, of an 
S&L, like Whitewater, drawing upon its regional home loan bank 
for additional emergency funds to shore itself up. The thing was 
cratering almost from day one. It had *all* the signs of an S&L 
going out of control -- for one thing, it was *growing* 
exponentially. Now this might be *real* good news if we were 
talking about General Motors, say, or IBM, were growing at this 
rate. But when a financial institution begins to grow at this 
rate, it's a sure danger sign.
 
The question is: Why wasn't it stopped earlier? The answer is: 
Why weren't *all* of them stopped earlier? We have *hundreds* 
across the country that were doing exactly the same thing.
 
 
INGE:
Let me re-introduce our guest: We're talking this morning with 
L.J. Davis. He's a contributing editor to *Harpers* magazine. He 
is also the author of an article that appeared this past spring, 
in April, in *The New Republic*, about Arkansas politics. And we 
will get into that in a moment, and also will invite people who 
are listening -- if you have questions, comments, we will involve 
as many people as we can. All we ask is that people try to be 
brief so that we can accomodate as many different callers as 
possible. But, in any case, your questions are welcome -- 333- 
WILL; 800-222-WILL.
 
Well, talking about Arkansas here: In the article you make a 
point that while Arkansas is one of the poorest states in the 
country, it has, indeed, some of the richest families in the 
country. And if you're gonna understand Arkansas politics, you 
need to know one name -- and that is the name of Stephens. The 
Stephens family, that has made a lot of money in various kinds of 
business and has a lot of important friends in politics in 
Arkansas.
 
Tell us about the Stephens family.
 
                   -+- Real Rich Guys -+-
 
DAVIS:
Well, you know, we've been talking a lot -- not just now, but the 
country's been talking a lot -- about all the back scratching 
that seems to go on in Arkansas. It's fairly typical of virtually 
any state. But Arkansas is unique amongst states, because thanks 
to the Stephens family it possesses the only major investment 
bank in the country that is not headquartered on Wall Street, 
called *Stephens, Inc.*, in downtown Little Rock. In Wall Street 
terms, it would be a mid-tier to lower-bracket firm, but in a 
place like Arkansas it has, apparently, *enormous* economic 
clout. Thanks to the Stephenses, for example -- or if it hadn't 
been for the Stephenses, for example -- Sam Walton might be known 
locally as the "most inventive retailer in Bentonville, 
Arkansas". But they handled his original stock offering that 
enabled him to go national and has been instrumental in, of 
course, the fortunes of Tyson Foods and the other companies that 
are located in Arkansas. (Which I also pointed out in the 
article, is a state that has no reason to be poor. It is 
*abundantly* endowed with natural resources.)
 
The story of *Stephens, Inc.* is in some ways a saga of American 
capitalism, a true rags to riches story. Witt Stephens, the elder 
of the two brothers that came to dominate the place, started his 
career by selling Bibles, belt buckles, and municipal securities 
out of a buckboard during the Depression. And eventually [he] 
realized, of course, that municipal securities were going to be a 
bonanza when their values revived after the Depression was over. 
And that was the foundation for the fortune. They were heavily 
into bonds throughout much of their professional career, but then 
moved on to a whole spectrum of investment banking activities -- 
underwriting stocks, participating in deals, that sort of thing. 
In addition to which, the Stephens family itself privately owns a 
bewildering variety of, or has shares of a bewildering variety 
of investments.
 
In other words, they're real rich guys.
 
 
INGE:
Huh, yeah. Real rich guys.
 
Let's talk about how Worthen Banking Corporation came to be. This 
was a bank holding company that was set up by, I guess, Jack, 
Jack Stephens, who is now the, sort of the head of the family. 
Witt, the older brother, is dead now. But Jack is the one who is 
now running things.
 
 
DAVIS:
Yeah. "Mr. Witt" has now passed on to his reward.
 
 
INGE:
And so they became involved with an Indonesian investor, 
apparently a very wealthy man, who wanted to get into American 
banking. And the Stephenses, Jack Stephens, set up this deal 
involving this Indonesian man, the Stephens company, and also the 
man who is the head of the prominent Rose Law Firm, in Little 
Rock, where (incidentally) also Mrs. Clinton worked as an 
attorney. And everybody got rich on the deal. And also, another 
sort of interesting side feature is that, to make this happen, a 
couple of laws needed to be changed. And that required the 
signature of the Governor, who happened to be married to this 
woman who was an important employee of the Rose Law Firm.
 
And so everybody seemed to get rich on the deal; the laws got 
changed. And it starts one thinking about, you know, whether 
there aren't some rather glaring conflicts of interest going on 
here.
 
 
DAVIS:
Well it didn't quite work out to the satisfaction of everybody 
involved. Yes, a good deal of money was made. But they had a lot 
of trouble with that bank.
 
Now the fact that the Indonesian, Mochtar Riady, an Indonesian 
investor named Mochtar Riady, was there, occurred at a very 
interesting moment in the history of the Stephens investment 
bank. Bert Lance had come to them with a... Remember him?
 
 
INGE:
Was director of OMB [Office of Management and Budget] under Jimmy 
Carter until he got himself into some trouble and, with his bank 
dealings in Georgia, and then had to resign.
 
              -+- "Follow the Bouncing Ball" -+-
 
DAVIS:
Absolutely beautiful trouble. And as a matter of fact, he was 
virtually bankrupt and his fortune was facing the [unclear] yard, 
back in 1979. His principle asset was a bunch of stock in the 
National Bank of Georgia. But the stock had been hammered in the 
market and if he sold it he couldn't possibly get himself out of 
his problem.
 
So it was to the Stephens family of Little Rock that he turned to 
solve this problem -- which attracted the attention of both the 
Indonesians, and a bunch of Pakistanis who ran an institution 
called BCCI [Bank of Credit and Commerce International].
 
When the smoke had cleared, the Pakistanis had been effectively, 
and in defiance of the very clear instructions of the comptroller 
of the currency, inserted into the American banking system by 
means of Bert Lance's stock and some other stock the Stephenses 
were disposing of in a snit, um, in Financial General that later 
became First American Bank Corporation, with results that we all 
know.
 
As for the Indonesians, they went into business with them, in the 
Worthen Bank Holding Company, which, depending on any, the state 
of banking in Arkansas at any given moment, is either the largest 
bank holding company in the state or the second largest bank 
holding company in the state.
 
It didn't require the signature of Bill Clinton exactly, but it 
required his passivity to allow this to come into existence 
despite the fact that his wife's boss, C. Joseph Giroir, had 
joined with his clients, the Stephens family -- the Rose Law Firm 
was one of the principle outside firms for the Stephenses -- in 
forming this bank holding company. And *he* [Giroir] is one of 
the one's, of course, who initially "made out like a bandit". I 
can't remember the exact figures, but he received several million 
dollars worth of forgiven debt, stock, and cash. That *does* look 
a little like a conflict of interest, if you're goin' into 
business with your client. And furthermore, your law firm now has 
a whole new client: a large bank holding company that you happen 
to own a hunk of.
 
There really is no such thing as an Indonesian multi-millionaire 
who is not, in some way, connected with General Suharto and -- 
the dictator of the country. As I pointed out in the article: As 
dictators go, General Suharto is a fairly decent chap. He hasn't 
felt obliged to slaughter too many of his citizens since he came 
to power in a massacre of 200,000 of them! (With the possible 
exception of the [unclear] war, that the world is not paying any 
attention to.)
 
But didn't anybody bother to question whether this was a real 
good idea? That the boss of the wife of the -- you know, it's 
like "The House That Jack Built", you've got to "follow the 
bouncing ball" here -- of the Governor of the state happens to be 
in partnership with his own client and an associate of the 
dictator of Indonesia?
 
It gets even *more* interesting when the Worthen Bank Corporation 
then proceeded -- very early in its career -- to gamble away $52 
million of the Arkansas state treasury in a blatantly fraudulent 
bond scheme!
 
                    [...to be continued...]
 
-----------------------------------------------------------------
     I encourage distribution of "Conspiracy Nation."
-----------------------------------------------------------------
If you would like "Conspiracy Nation" sent to your e-mail 
address, send a message in the form "subscribe conspire My Name" 
to listproc@prairienet.org -- To cancel, send a message in the 
form "unsubscribe conspire" to listproc@prairienet.org
-----------------------------------------------------------------
Aperi os tuum muto, et causis omnium filiorum qui pertranseunt.
Aperi os tuum, decerne quod justum est, et judica inopem et 
  pauperem.                    -- Liber Proverbiorum  XXXI: 8-9 

 Brian Francis Redman    bigxc@prairienet.org    "The Big C"
--------------------------------------------------------------
"Justice" = "Just us" = "History is written by the assassins."
--------------------------------------------------------------

