Madison Guaranty

Madison Guaranty Savings and Loan Association

Company type	Private
Industry	Financial services
Founded	1979
Defunct	1989
Fate	Closed by federal authorities due to bank failure
Headquarters	Little Rock , United States
Key people	Jim McDougal (owner and manager from 1982)
Products	Savings and loan services

Madison Guaranty Savings and Loan Association was a savings and loan association located in Little Rock, Arkansas, functioning from 1979 until its closure by federal authorities in 1989 due to bank failure. This collapse led to a $60 million loss for the Federal Deposit Insurance Corporation. Beginning in 1982, ownership and management were held by Jim McDougal, a close associate of Bill Clinton and Hillary Clinton. On March 8, 1992, amid the 1992 United States presidential election, The New York Times connected the institution to the Whitewater Development Corporation, which was owned by McDougal alongside the Clintons. Following Clinton’s election victory, Madison Guaranty became the subject of inquiries conducted by the United States Congress and special prosecutor Ken Starr within the framework of the Whitewater controversy. McDougal faced scrutiny for allegedly misappropriating bank funds either to Whitewater or to support the Clinton campaign during the Arkansas gubernatorial election, 1984.

History

The institution was initially chartered in Arkansas as Woodruff County Savings and Loan in Augusta in 1979. Between June 1979 and December 1981, its assets expanded from $2.6 million to $3.8 million.

A regulatory audit performed in April 1982 by the Federal Home Loan Bank Board uncovered substantial losses and raised concerns about the institution’s solvency. Later that year, Jim McDougal and Steve Smith acquired Madison, appointing John Latham as CEO. Assets experienced rapid growth, rising from $6.7 million at the close of 1982 to $48.6 million by 1986. Control passed to McDougal and his wife Susan in 1983.

A federal review in 1984 identified risky lending practices; accounting losses indicated potential insolvency. In August 1986, regulators mandated McDougal’s removal from operational management, though he maintained ownership rights. Appraiser Robert W. Palmer confessed to falsifying property valuations.

The bank’s assets reached their highest level at $125.5 million in 1986.

Federal regulators seized Madison Guaranty on March 2, 1989, placing it into receivership under the Federal Savings and Loan Insurance Corporation.

In April 1997, Jim McDougal was convicted on eighteen felony counts related to conspiracy and fraud involving problematic loans issued by Madison. He was sentenced to three years imprisonment and ordered to pay $4.27 million in restitution to both the Small Business Administration and FDIC.

Madison Guaranty and McDougal retained defense services from the Rose Law Firm, where Hillary Clinton was employed. For several years, billing records associated with Mrs. Clinton’s work for Madison Guaranty and McDougal’s Castle Grande real estate venture were missing, sparking questions about her level of involvement. McDougal organized a fundraiser at Madison Guaranty that contributed toward settling Clinton’s $50,000 campaign debt; cashier’s checks totaling $12,000 originated from Madison funds. On January 4, 1996, Clinton’s billing documents were discovered at the White House indicating she recorded approximately sixty hours of legal work for Madison during 1985–86.