Memories Of Keating
As we watch yet another Republican financial crisis unfold before our very eyes, everybody needs to employ Mr Google to read up a little bit on the Keating Five scandal. McCain was big, big pals with Charles Keating. He spoke up for Keating with the regulators, buying him more space to defraud his investors --- and the taxpayers --- even more than he already had. He has not changed his philosophy since then. In fact, his closest economic advisor, Phil Gram, apparently believes that these firms should be completely unregulated and then bailed out by the taxpayers on a regular basis.
John McCain has a long history with bank failures and financial scandals. He created his whole reform persona around the idea that he'd come too close to the flame and gotten burned. But he hasn't changed his philosophy or his policies one bit. He believes in the same scam his close advisor Phil "you're all a bunch of whiners" Gramm believes. He pretended for years that the problem was solely in the campaign finance system, burnishing his image with signature legislation that has proven to be completely useless. Meanwhile, he backs deregulation like it comes down from Mt Sinai.
There's more in this post I wrote a month or so ago. And if you didn't view it before, you might want to take a look at McCain's press conference and committee testimony from that period. It's pretty lethal.
Every two term Republican in the last 80 years who isn't Ike had some kind of a severe meltdown in the financial system. Coincidence?
Update: Here's a great article on Keating and McCain from the Boston Globe:
Black ... maintains that the Keating case was a textbook example of politicians, McCain among them, serving a major donor. And Dennis DeConcini, a former Democratic senator from Arizona and another of the Keating Five who hosted the key meeting in his office, said in an interview that McCain has gotten a relatively "free ride" even though DeConcini insists that McCain was the "most culpable" of the senators because he had the closest relationship with Keating.
McCain met Keating in 1982, during McCain's successful run for Congress, and soon began accepting offers from Keating to fly McCain's family on a corporate plane to Keating's house in the Bahamas. McCain did not pay for most of the trips until years later, when the matter became public.
Keating, meanwhile, complained regularly to McCain that a proposed regulation would hurt his business. Known as the "direct investment" rule, it limited the amount that savings-and-loan institutions could invest from their assets. In 1985, after having "heard frequently from Charlie on the matter," McCain decided that Keating's complaints "were sound enough to warrant our assistance." He cosponsored a resolution sought by Keating, but it failed to postpone the regulation, McCain wrote in his autobiography.
By then, Keating was one of McCain's most important benefactors; McCain received $112,000 in campaign donations from Keating and his Lincoln associates, mostly between 1982 and 1986.
In the summer of 1986, while McCain was running for the Senate, the banking executive wrote him letters castigating the regulators. "The [bank board] is a mad dog turned loose in a police state," Keating wrote in one of them. Weeks later, McCain accepted another trip aboard Keating's jet to the Bahamas.
"I genuinely liked him and enjoyed being around him, especially on those occasions when Cindy and I and our oldest child, Meghan, were invited to his family's vacation home in the Bahamas," McCain wrote in his book. "I was never concerned that the time I spent enjoying Charlie's company would raise public doubts about my judgment."
With McCain having failed to postpone the regulation limiting investments by a savings and loan, Keating wanted him and other senators to get the Federal Home Loan Bank Board to grant Lincoln an exemption from the rule. McCain subsequently attended two meetings with regulators.
McCain said he felt he had a responsibility to a constituent whose company had 2,000 employees. Yet McCain had reason to be wary. His closeness to Keating had been an issue in his 1986 campaign, and aides urged him not to go to the meetings.
Four senators, including McCain, met with Edwin Gray, the chairman of the Federal Home Loan Bank Board in Washington that April in 1987. When Gray returned from the meeting, he told Black he was "very upset" that the senators were trying to pressure him, according to Black's Senate testimony. Gray told Black to attend a follow-up meeting and take notes. Gray could not be reached for comment.
A week later, five senators, including McCain, met with Black and three other regulators at DeConcini's office.
"I don't want any part of our conversation to be improper," McCain said, according to Black's notes. Then he launched into a complaint about how regulators were conducting an examination of Lincoln's finances. "It seems to me, from talking to many folks in Arizona, that there's a problem," McCain said, according to Black's notes.
Black later told the Senate Ethics Committee that the actions of the five senators were clearly "improper."
"This was an institution that is probably the worst institution in America," Black said, referring to Lincoln. Instead of trying to help "bring it under control, five US Senators were pushing us in the opposite direction."
Does anyone truly believe, after the ring kissing and genuflecting McCain has had to do to get back in the good graces of the GOP establishment, that he would be a "maverick" on this issue in 2009? If you do, I have some Lehman stock I'd like to sell you.