SLIPS ON THE PAPER TRAIL

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Republican Senator Alfonse D'Amato, whose Banking Committee is investigating Whitewater, said last week's revelations suggested a cover-up: "We have a difficult time believing that this was not a deliberate withholding," he said. "There is clearly a pattern of deception that is disturbing and troubling.'' Moreover, a counsel for the committee has suggested that the "disappearance" of these records raises the possibility of obstruction of justice.

Mrs. Clinton has stated that the lion's share of the work on Madison was done by a "bright young associate" named Richard Massey. Mrs. Clinton has also implied in a sworn statement to the RTC in May 1995 that Massey brought Madison's business to the firm. Committee sources tell TIME that Massey will testify this week, that he did not bring Madison in as a client and that he assumed Mrs. Clinton was involved.

Meanwhile, the White House provided the Senate Banking Committee last week with a glimpse of privileged documents, including a photocopy of a Dec. 20, 1993, New York Times editorial with curious presidential marginalia. The editorial, which chastises Clinton for not cooperating with the Whitewater investigation, mentions Beverly Bassett Schaefer, whom then Governor Clinton appointed to the agency that oversees savings and loan associations in Arkansas. According to committee sources, the President drew an arrow from Schaefer's name and scrawled, in a reference to his 1992 campaign, "This is important to be on top of. Bassett did a good job in camp. on this--can she now?" Mark Fabiani, an associate White House counsel, argues that Clinton's note simply reflects his hope that she would continue to express the view that state regulators had moved aggressively to close Madison down.

All of these questions come at an awkward time for the Clintons. The President was said to be so distracted by the disclosure of the Watkins memo Wednesday night that his mind wandered during the budget talks. As for his wife, the revelations are likely to make it harder for her to take a larger public political role anytime soon.

--Reported by James Carney and Viveca Novak/Washington

COLOR PHOTO: NINA BERMAN--SIPA FOR TIME CONTRADICTION: D'Amato, right, calls the revelations about the First Lady's legal work "troubling" [Hillary Clinton]

COLOR PHOTO: MIKE THIELER--REUTERS [See caption above--Alfonse D'Amato]