WASHINGTON (AP) _ Arkansas' Democratic senators complained last year to the Clinton administration that the government had hounded the father-in-law of Associate Attorney General Webster Hubbell for $340,000 - money that had come from the collapsed S&L now at the heart of the Whitewater affair.

Hubbell's father-in-law, Seth Ward, surrendered the funds last April to federal regulators, who waged a protracted court fight to get them, according to correspondence released Thursday by the Resolution Trust Corp.

The RTC issued the documents in response to Freedom of Information Act requests from news organizations.

Federal regulators said Ward wasn't entitled to the money because it consisted of real estate commissions from land deals that ''led to the insolvency and failure of Madison Guaranty,'' according to an RTC letter to Sen. David Pryor, D-Ark.

Ward - who had gone to work for Madison - had been awarded the money after suing his employer in state court in Arkansas, but the regulators took up the matter in federal court.

The evidence in federal court ''showed that he (Ward) participated in a series of transactions'' enabling Madison ''to circumvent federal laws and regulations,'' said the Nov. 9 letter to Pryor by Peter Knight, the RTC's acting director of governmental relations.

Ward's lawyer, Alston Jennings, denied the accusation.

''It is totally erroneous,'' Jennings said in an interview.

Ward settled his court case against the RTC last April, saying he couldn't afford to pay any more legal fees and protesting to Arkansas' Democratic senators that the government's pursuit of the matter was ''Orwellian.''

Sen. Dale Bumpers immediately took up Ward's cause, firing off a ''Dear Roger and Bernard'' letter to a pair of now-familiar names in the Whitewater affair - Deputy Treasury Secretary Roger Altman and ex-White House counsel Bernard Nussbaum.

''It appears that RTC's litigators are trying to make themselves look aggressive,'' Bumpers complained.

In his letter dated July 16, Pryor called Ward's story ''an appalling tale about a waste of taxpayer funds and abuse of power'' by federal regulators. The July 16 letter to Altman was attentioned to Treasury chief of staff Joshua Steiner.

Altman asked the RTC's acting general counsel to review the Ward matter, Altman informed Pryor and Bumpers last August.

Bumpers' letter - which sought White House review of RTC policies for seeking the recovery of funds from executives of collapsed S&Ls - copied in fellow Arkansans Mack McLarty, the White House chief of staff; and William Kennedy III and Vincent Foster, both of the counsel's office.

White House spokesman Calvin Mitchell said Thursday night he was unfamiliar with the matter and did not know whether any action had been taken.

Altman, Nussbaum and Steiner all have been called before a federal grand jury as part of Whitewater prosecutor Robert Fiske's investigation of whether the White House tried to impede RTC inquiries into Madison. Steiner spent two hours before the grand jury Thursday. Fiske also is investigating the circumstances surrounding Foster's apparent suicide in July.

Fiske is looking into whether President Clinton and his wife, Hillary, benefited from depositors' funds from Madison, the S&L owned by their partner in the Whitewater real estate venture, James McDougal.

Hubbell resigned his Justice Department post in March amid allegations by his law firm that he overbilled clients. He had been a senior partner in the Rose Law Firm with Foster, Kennedy and Mrs. Clinton.