Suddenly, An Old Nemesis

Jay Stephens isn't exactly a household name, but you can bet Bill Clinton knows all about him. Until last year, when the President fired every one of the nation's 93 U.S. Attorneys, Stephens was leading the federal investigation of House Ways and Means chairman Dan Rostenkowski for allegedly misusing his $1.3 million campaign fund, a probe intertwined with the House post-office scandal. Clinton's sacking of the federal prosecution chiefs is believed by some of the dismissed to have been a way of getting Stephens off Rosty's back. Now, though, Stephens is engaged in an even more sensitive inquiry, and this time Clinton could become a target.

Stephens and other lawyers in the Washington office of San Francisco's Pillsbury Madison & Sutro have been retained by the Resolution Trust Corporation to investigate civil claims flowing from the failure of Little Rock's Madison Guaranty Savings & Loan, the institution run by James McDougal, the Clintons' partner in Whitewater Development Corp. Stephens won't elaborate on his work, which began last month, but it's likely to bring more heat on Clinton. Sources close to the investigation describe Pillsbury's effort as "the civil equivalent of ((Whitewater special counsel Robert)) Fiske."

At first blush there's nothing unusual about the RTC's appointing a lawyer like Stephens. With its staff taxed to the limit, the RTC routinely farms out complicated legal work to private lawyers. But the agency didn't pick just anyone. Stephens, says a banking regulator, "was deliberately chosen so the RTC could deflect any charges that it wasn't being rigorous in its Madison- related investigations."

Rigor is certainly what Clinton can expect. Stephens, 47, is a lifelong Republican with impressive academic and prosecutorial credentials. After a boyhood on an Iowa farm, he studied at Harvard College and Law School and at Oxford. He spent a brief time in private practice, became an assistant special prosecutor in the Watergate scandal under Leon Jaworski and rose steadily through top-level posts at the Justice Department and White House. During one tour, he was Ronald Reagan's deputy White House counsel, the job the late Vincent Foster held under Clinton at the time of his death last July. After becoming U.S. Attorney for the District of Columbia in 1988, Stephens directed the successful prosecution of former Washington Mayor Marion Barry on drug charges.