RIGHT OF CENTER: BILL CLINTON'S BANKING BUDDIES

On the campus of Southern Illinois University at Carbondale this week, President Clinton led an administration-wide attack on proposed GOP education cuts. At the same time, he accused Republicans of caving in to the bank lobby by voting to ditch his direct college loan program.

In picking a fight with bankers, Clinton takes hypocrisy to new heights.

Bankers aren't the bad guys with regard to the national student loan program. If the president has smaller banks in mind when he laments the lack of subsidized loans for students, his criticism is misdirected. One reason many such banks shun the program is because of the accompanying government regulations.

But Clinton also scolds those banks that make subsidized loans to students. He thinks he has a better plan: Direct, subsidized government loans financed entirely by taxpayers.

But why should taxpayers have to pay for college students' education? Those with children attending college already shoulder the burden of rising tuition. And those without children in college shouldn't be asked to subsidize others' higher education.

The banks that provide loans through the program are doing taxpayers a favor. So what is Clinton's beef? That those banks make a profit through the loan program?

Why shouldn't they? One need only look at the national default rate to see that student loans are risky. Bankers aren't getting rich off the loans, but they are accountable to shareholders. If they're going to make risky student loans, they're going to have to show some return on that risk.

The fact is, banks are willing to provide subsidized loans, because it is a good way to build a customer base. When students graduate, they'll be in the market for the bank's credit cards, for auto loans and, later, mortgages.

Nothing sinister there. For sinister, take a look at the president's close ties with crooked banking interests in his home state of Arkansas. The shenanigans of a few of that state's lending institutions under then-Gov. Clinton's watch reveals Clinton's chummy relationship with some bankers.

Wade through the thick fog of subterfuge, and a web of fraud and deceit emerges.

Consider the Arkansas Development Finance Authority, formed by then-Gov. Bill Clinton in 1985. ADFA was created ostensibly to provide bond issues for low-interest loans for start-up and minority businesses unable to secure financing anywhere else. While ADFA's benevolent purpose was to lure industry to Arkansas by offering low-interest bond money, only about 60 bond issues came through the agency between 1985 and 1992. But that doesn't mean ADFA wasn't doing big business in Arkansas.

In his book, "Circle of Death," lawyer Richmond Odom explains that ADFA was less a bond factory than it was a "microcosm of the notorious Bank of Credit and Commerce International (BCCI), the world's largest Ponzi scheme."

Clinton's brainchild, ADFA, had a less noble purpose than financing fledgling businesses in Arkansas. Its real stock in trade was drug money.

"Through a series of well-connected banks, from Pine Bluff to Paragould, cash from the cocaine and heroin trade could be laundered in the land of opportunity," writes Odom.

The way drug money was laundered in Arkansas reveals a little about the man who lived in the statehouse at the time. With Clinton's blessing, lawyers at the Rose Law Firm -- who were later ushered into the White House as top Clinton administration officials -- drafted what would become legislation to ease government regulations on selected banks.

The Bank Secrecy Act, passed in 1970, requires the filing of transaction reports by banks that accept cash deposits of $10,000 or more. But banks in ADFA's loop were allowed to ignore the law and launder hundreds of millions of dollars in "black money" -- proceeds from illegal drugs and weapons sales.

The ADFA banks not only resembled BCCI's crooked enterprise, they were linked directly, through Worthen Bank, to BCCI's network and were able to move money to BCCI offices in the Cayman Islands and elsewhere when things got too hot in Dogpatch.

The CIA also used ADFA to launder cash it received through arms sales to the Contra freedom fighters in Nicaragua. Investigators of the CIA-Arkansas deal say the CIA agreed to pay 10 percent of the money it received from soldier-of-fortune Barry Seal's arms-smuggling operation to ADFA in exchange for the state's tacit consent and cooperation. The agreement prompted Seal to joke that Arkansas was "the only country north of Mexico where drug smugglers could get a police escort."

But what did Bill Clinton get from the deal? A ready cache of money -- from the Worthen Bank, the Bank of Kingston, the Perry County Bank, the Bank of Cherry Valley, the Union Bank of Mena, First South of Pine Bluff, and the Bank of Paragould, among others -- to finance his political aspirations.

A lot of other illegal activity occurred in Arkansas under Bill Clinton's watch, much of it involving persons close to the president. Independent Counsel Kenneth Starr continues to investigate the intricate Arkansas web. Much of the information likely will never surface, and the president might dodge the most damning evidence of criminal wrongdoing.

But it's safe to say that despite his critical remarks this week, Bill Clinton is no foe of at least some bankers.

~Jay Eastlick is the news editor of the Southeast Missourian.