The banking crisis of 2008 evokes memories of the Savings and Loan crisis from the 1980s. John McCain played a central role in both crises. John McCain’s good friend and campaign donor, Charles Keating, with a little too much help from John McCain, helped precipitate the earlier crisis. This means Keating is now a central figure in the 2008 elections.
As we reported below, a top McCain aide told the Washington Post “We’ve got to question this guy’s associations.” Since “associations” are an issue for Team McCain and the economic crisis is THE issue for the American people, lets combine them for John McCain and recall Charles Keating:
Way back in the late 1980’s there was a similar banking scandal involving billions of taxpayer dollars, that time in the savings and loan industry. Eventually, scores of small thrift banks failed and the government ended up creating a special unit to buy up toxic debt and slowly over years salvage what they could and get rid of the rest.
The reason why it’s topical now isn’t just because the federal government is using a similar rescue model to bail out Wall Street but also because of presidential nominee, John McCain’s involvement both then and now.
Back then, the bank at the center, Lincoln Savings and Loan, was a subsidiary of American Continental Corporation and was owned by Charles H. Keating, Jr., a prominent real estate developer who was eventually found guilty of 73 counts of wire and bankruptcy fraud and sentenced to 12 years and 7 months in prison. He served only 50 months before the conviction was overturned on a technicality.
Wrapped up in the debacle were a series of unusual meetings two years before the collapse between banking regulators and five prominent US Senators, including John McCain. The meeting was at the behest of Keating who was calling in chits to get the regulators to back off of the ill-fated Lincoln. The regulators who were present would later say how much they were intimidated by the entire proceeding and Lincoln ended up with a little more time before eventually imploding.
The Senate Ethics Committee held hearings over 23 days in November of 1990 to investigate the meetings and the Keating Five, including McCain, as they came to be known. There was a good slap on the wrist passed out to all concerned and the taxpayers ended up with the billion dollar savings and loan hangover. Trading cards were briefly sold displaying Keating with each of the Senators.
During that time, it also came out that the Keating Five had accepted campaign contributions from Keating topping $300,000 with McCain receiving the lion’s share. McCain had also made at least nine trips with his family at Keating’s expense at a cost of over $13,000. Not all of it was reimbursed by McCain until after Lincoln was in serious trouble. And in 1985, a year before the meeting between the regulators and US Senators, McCain’s wife Cindy and his father in law invested over $350,000 in a shopping mall development with Keating. None of it was in any way criminal, just a question of judgment.
NOTE FROM JOHN: Don’t forget about McCain’s other “association“: