Clinton loses his reelection bid and enters private legal practice. 1982 McDougal buys a small savings and loan and names it Madison Guaranty. After two years as a private citizen, Clinton is once again elected governor. 1984 Federal regulators begin to question the financial stability and lending practices of Madison Guaranty, criticizing Madison's speculative land deals, insider-lending and hefty commissions paid to the McDougals and others. Clinton is reelected.
Investigators later determine some of the money was improperly withdrawn from depositor funds.
McDougal hires the Rose Law Firm, where Hillary Clinton is a partner, to do legal work for the ailing savings and loan. Hillary Clinton and another Rose lawyer seek state regulatory approval for recapitalization plan for Madison. Citing improper practices, federal regulators remove McDougal as Madison Guaranty's president, but he retains ownership. 1988 Witnesses from the Rose Law Firm say Hillary Clinton requested the destruction of Madison land contract files. Hillary Clinton writes James McDougal to ask for power of attorney to sell off remaining Whitewater lots and clear up bank obligations.