Sprinkle squabs with 1/2 teaspoon salt and 1/4 teaspoon pepper. Melt butter in a skillet; add squabs, and cook until brown. Transfer squabs to a 3-quart casserole, reserving drippings in skillet.
Add flour to pan drippings; stir until smooth. Cook 1 minute, stirring constantly. Gradually add broth; cook over medium heat, stirring constantly, until thickened and bubbly. Stir in remaining salt and pepper. Add mushrooms, onion, bay leaf, and cloves; cook over medium heat, stirring occasionally, until thoroughly heated.
Pour sauce over squabs, and cook, covered, over low heat for 45 minutes or until squabs are tender. Remove bay leaf and cloves; discard. Serve squabs with toast points. Garnish with parsley.