McKeating Five Remembered

By: Elaine in Roanoke
Published On: 9/24/2008 10:12:57 AM

Sadly, we Americans have difficulty remembering even recent history. The corporate broadcast and cable media aids and abets this dysfunction by having "anchors" and talking heads picked for their looks, certainly not their brains or their knowledge base.

Economically, we have been where we are now not that long ago - and with a Bush in the White House, to boot. This time the bad economic news is compounded and the Bush we now have is light years worse than the last one.

The Republican Party - to top it off - has had the audacity to nominate a guy who was knee-deep in the mud of financial scandals the last time - John McSame.

Let's go down memory lane, shall we...to a place called "Keating Five and S&L Bailout."
The last time we had a financial crisis related to lending practices was the savings and loan scandal of the late 1980's and early 1990's. The crisis began when S&Ls became squeezed by their inability to attract deposits, in part because their rates and the business they could engage in were regulated. When the industry got itself de-regulated, it started doing all kinds of things to make money.

S&Ls started making commercial loans, issuing credit cards, taking ownership positions in real estate deals they made loans to. In other words, the original reason savings and loan institutions existed - to provide affordable mortgages to credit-worthy individuals - became muddied. Sound familiar?

This will be even more familiar: S&Ls lent more money than they should have in risky deals whose real value they were not able to assess. Fraud, insider deals and other abuses contributed to the implosion of that real estate market.

Many S&Ls went belly-up, and the taxpayers had to bail out the institutions to the tune of $180-200 billion.

As the then-head of the Federal Deposit Insurance Corp. (FDIC) said, "The banking problems of the '80s and '90s came primarily, but not exclusively, from unsound real estate lending." (It seems that we are right back where we started, doesn't it? Well, actually we are now in a MUCH deeper "big muddy.")

Can we trust John McSame to lead the nation in such a time of economic distress? I contend that his participation in one of the scandals of that period should automatically disqualify him from consideration.

McCain was caught up in what became known as the "Keating Five" scandal. Five U.S. senators (Alan Cranston, Don Riegle, Dennis DeConcini, John Glenn, John McCain) were implicated in an influence-peddling scheme. Charles Keating of Arizona, who headed a go-go greed machine called Lincoln Savings and Loan, had made $300,000 in political contributions to the senators in the 1980s.

When the the government began investigating and threatening to seize Lincoln Savings and Loan, a subsidiary of Keating's American Continental Corp, Keating decided it was time to call in all that influence he had bought. (You know, that "access" that only money can buy.)

Keating asked DeConcini to organize a meeting with the regulators with a simple message: Stop bothering Lincoln S&L.   DeConcini then set up a meeting between the five senators and the regulators.

McCain knew Keating well. His ties to the home builder dated to 1981. In 1982, during McCain's first campaign for the House of Representives, Keating held a fund-raiser for him, collecting more than $11,000 from 40 employees of American Continental. By 1987, McCain had received about $112,000 in political contributions from Keating and his associates.

Keating had gotten a return on his money more than once from McCain. While in the House of Representatives, McCain co-sponsored a resolution to delay new regulations designed to end risky investments by thrifts and savings and loans.

McCain attended two meetings with the regulators, later explaining that he thought it was the right thing to do, because Keating was a constituent.

DeConcini, Cranston, and Riegle had their senate careers cut short by all this. McCain and Glenn were reprimanded by the ethics committee for their "poor judgment."

John Glenn, the first American to orbit the earth, had his presidential aspirations dashed by the Keating Five mess. I contend the same should be true for John McCain.

O.K., let's let the ethics committee call corruption "poor judgment." John McCain's "poor judgment" disqualifies him for the presidency in my book. How about you?


Comments



New Gingrich, a political Lazarus, (Teddy - 9/25/2008 10:02:18 AM)
is emerging from his voluntary tomb to issue pronouncements to Republicans which sound eerily like McCain and more of the same.  His proposals, I have heard, are: help poor Wall Street and the banks out by resusitating the poor dears, provide more de-regulation (that is, hair of dog medicine) and, to pay for this, privatize Social Security and end Medicare. I personally believe that those two items (Social Security and Medicare) are, along with enhancing executive power, the real targets in all this hoo-ha about saving the nation from disaster right away, right now, don't stop to think, move it, quick!

The call for a meeting at the White House to "brief" significant members of Congress and the two main candidates for President (the invitation would have to go to the presidential candidates as such, because McCain is not on any relevant committee) is very much like similar conferences held in the past in Chile, Bolivia, and elsewhere, during similar disasters when autocrats, inspired by the World Bank and IMF, sought to impose pure Free Trade Friedman policies on a reluctant but shell-shocked populace. I believe that is the intent here.