So I watched the Obama campaign's Keating documentary, and it's a fairly good recitation of the scandal, and the connection to the financial crisis of the present.
What's more, the research section of the "Keating Economics" site includes a wealth of information and documents, including personal letters from McCain to White House colleagues and federal regulators asking for them to back off Charles Keating. This letter to then-WH Chief of Staff James Baker in 1985 is particularly striking, if only for the line "I believe it to be unwise, and I think it flys (sic) in the face of our recent efforts to remove the hand of government from the affairs of private enterprise." That sentence alone explains much of the current crisis.
Now, what's been very interesting is the McCain campaign's reaction to this. Rewriting 20 years of history, they have trotted out surrogates, including McCain's lawyer in the case John Dowd, to claim that the entire affair was a classic political smear job on the Arizona Senator. This makes no sense, considering that McCain's very cultivated media image was entirely launched on his admission of guilt in the Keating case. As usual, Billmon puts it best.
But I was around, and following congressional politics rather closely (by which I mean professionally) when McCain first popped up on the political radar screen in 1986 during the so-called Keating Five scandal. In exchange for various regulatory favors, Keating, a wealthy and politically, um, generous, S&L executive, turned himself into the special friend of a bipartisan group of sleazebag Senators, with five in particular, including McCain, reaping most of the benefits. By modern standards (i.e. Jack Abramoff’s and Ted Steven’s standards) it was actually pretty tame stuff, but it was considered a big deal at the time.)
In a sense, the scandal marked the birth of the McCain "brand," because unlike the other four of the Five, he stood up in the Senate and more or less admitted he was guilty (not nearly as guilty as the others, he hastened to point out – but still, he felt bad about what he had done.) This went over really big with the media ("Senator admits guilt" outranking even man bites dog on the news-o-meter.)
Now, if you go back and look, you’ll see that if Keating didn’t comp McCain as generously and vigorously as he did the other four, it was probably because McCain was a very junior senator at the time, with relatively little influence to peddle. But it wasn’t because Honest John was shy about accepting the favors that were offered him. If John McCain had a problem with the way lobbying (i.e. legalized prostitution) was being done in Washington, you definitely won’t find it in the record of the Keating investigation. McCain’s fit of Puritan self-righteousness (or political calculation, depending on your view) came after the fact, once he’d already been caught. And yet, from that single Senate speech sprang the shoot that eventually grew into the sturdy tree of John McCain’s media image.
You have to admit it was a neat trick: Happily accepting the naughty goodies while they were being handed out, but then winning brownie points for admitting he took them – after the world had already found out he took them. But that’s precisely what McCain did. He’s never looked back since.
Until today, when he flip-flopped on his own contrition, and basically used the time-honored political trick in describing an investigation against him as a "witch hunt."
This is the usual move for McCain. He admits his own failures only when it's politically convenient. In the moment he's as dishonest and dishonorable as the rest, probably more. But at the proper moment, he returns to the lecturn and somberly recounts his moral failings, weeping at the altar of honor for all to see, and the media responds in Pavlovian fashion with a handkerchief for their fallen warrior and a flurry of encomiums to his great character. Whether that will happen this time around is unclear. But McCain reverting back to the "I did nothing wrong" side of the Keating Five scandal should make it pretty obvious that to him, "honor" is a coat that is worn only in winter, only when necessary.