This is the third and final excerpt from the book "The Great Whitewater Fiasco: An American Tale of Money, Power and Politics," a Ballantine trade paperback by Martin L. Gross.
The lives of William Jefferson Clinton and James B. McDougal have regularly come together over the last 25 years, but fate has treated them differently.
Mr. Clinton is president of the United States, while Mr. McDougal has been struck by a series of indignities related to his Madison Guarantee Savings and Loan debacle and his partnership with the Clintons in Whitewater.
Back in 1968, it was Mr. McDougal who was the mentor to a young college senior named Bill Clinton.
Mr. McDougal was running Sen. J. William Fulbright's office and Bill arrived to work there after his graduation from Georgetown.
As years went on, Mr. McDougal was an invaluable member of the Arkansas "political family," as he called it. But after Whitewater, Mr. McDougal became bitter at his ex-partner.
Speaking about the Clintons' supposed loss of more than $68,000 (since scaled back to $47,000 when the president said he forgot about more than $20,000 he had given his mother), Mr. McDougal, who apparently made all the mortgage payments on Whitewater, let the president have it.
"I saw the article in the Post where some guy just accepted the Clintons' $68,000 loss," Mr. McDougal said angrily. "I could sink it [the estimate] quicker than they could lie about it if I could get in a position so that I wouldn't have my head beaten off, and Bill knows that."
But today, the "new McDougal," as one federal investigator calls him, has become very supportive of the president -- at least for now.
Once Hillary Rodham Clinton moved to Arkansas in 1974, the two families built what Susan McDougal, then Jim's wife, called an "unbelievable friendship."
Mr. McDougal worked in Mr. Clinton's 1978 gubernatorial campaign and it was then that they started the business known as Whitewater.
"I wanted to make some money for Bill Clinton," Mr. McDougal has said. The land in northwestern Arkansas, 230 acres mainly overlooking the White River and the site of some of the state's best fishing, was sold to the Clintons and the McDougals for $203,000, all of which was borrowed from two banks.
The lots sold well initially, but high interest rates then dried up sales and hurt Whitewater's loan repayments to the banks.
Something was needed to stimulate business.
The answer was a model home. The problem was $30,000. By this time, in December 1980, Mr. McDougal, along with partners including Jim Guy Tucker, the present governor of Arkansas, had bought control of the Bank of Kingston.
A small institution, it was still rich enough to handle a $30,000 loan. But there was a catch. As the controlling member of the bank, Mr. McDougal could not lend Whitewater the money.
The answer was Hillary Clinton, then working for the Rose Law Firm in Little Rock. She was a shareholder in Whitewater but not an officer. She volunteered, and Mr. McDougal's bank lent Hillary the $30,000 on Dec. 16, 1980.
The Clintons' claim to innocence in Whitewater is that they were passive investors, just as if they merely held a share of IBM.
But the tale of Lot 13, a three-acre piece of land on which the model home was built, tells a far different story. It goes as follows:
* The mortgagor released Lot 13 to Whitewater Development, which transferred it to Hillary without payment of one penny.
* Hillary used the land as collateral to get the $30,000 loan. A check for that amount was deposited into the Whitewater account.
* A modular home was purchased and placed on Lot 13. Hillary was given the deed for the lot and the house.
* Whitewater -- not Hillary Rodham Clinton -- regularly paid the principal and most of the interest payments on the $30,000 loan.
* In 1982, Hillary sold the lot and house to Hillman Lodge for $27,000, and may have pocketed the down payment.
* Mr. Lodge made several payments, then went bankrupt, after which he died. Hillary bought back the land and the house from the bankruptcy court for $8,000.
* Meanwhile, Governor Clinton borrowed $20,000 from another bank to pay off Hillary's loan.
* Hillary resold Lot 13 and the model house for $28,000. She paid off the loan, on which she had never made any principal payments. The Clintons kept the balance of the money and reported a capital gains tax of $1,640.
Rep. Jim Leach, the incoming chairman of the House Banking Committee -- using the final sale price of $28,000 and the payment of $8,000 -- says that the Clintons made more on Lot 13 than the amount they declared on their taxes.
In fact, Mr. Leach, noted for his moderation, believes that "the Clintons made money, not lost it, on Whitewater."
He sums that up as follows:
* $8,000 in real dollar tax gain from interest deductions on Whitewater.
* $20,000 in capital gains on the sale of Lot 13 and the model house.
* $500 capital gain in the $1,000 sale of their Whitewater share to Mr. McDougal, handled by Vince Foster.
* $35,000 (or more), the Clintons' share of capital that Madison Guaranty and its affiliated companies allegedly put into Whitewater, according to RTC investigators.
* $55,000, the Clintons' share of the $110,000 of Judge David Hale's illegal $300,000 loan to Susan McDougal which allegedly went into the Whitewater account.
lead,1 * Payment of $9,200 by Whitewater to reduce the principal of Hillary's Bank of Kingston loan and $12,133 payments by Whitewater on Bill Clinton's subsequent loan -- a total of $21,333 that he believes was income to the Clintons. Using these figures, we come up with a gross gain to the Clintons from Whitewater of $139,833. Deducted from that is the Clinton claim of $46,636 in losses, leaving a net gain of $93,193.
Whatever the exact amount, the Clintons apparently did not lose on Whitewater -- except politically.
Martin L. Gross is the author of seven nonfiction books, including "The Government Racket: Washington Waste from A to Z" and "A Call for Revolution."