Memory Jogger: The Keating Five Scandal

[babylonsister]

http://en.wikipedia.org/wiki/Keating_five

The Keating Five (or Keating Five Scandal) refers to a Congressional scandal related to the collapse of most of the Savings and Loan institutions in the United States in the late 1980s.

Following the deregulation of the banking industry in the 1980s, savings and loan associations (also known as thrifts) were given the flexibility to invest their depositors' funds in commercial real estate. (Previously, they had been restricted to investing in residential real estate.) Many savings and loan associations began making risky investments. As a result, the Federal Home Loan Bank Board, the federal agency that regulates the industry, tried to clamp down on the trend. In so doing, however, the FHLBB clashed with the Reagan administration, whose policy was deregulation of many industries, including the thrift industry. The administration declined to submit budgets to Congress that would request more funding for the FHLBB's regulatory efforts.

In 1989, the Lincoln Savings and Loan Association of Irvine, Calif., collapsed. Lincoln's chairman, Charles H. Keating Jr., was faulted for the thrift's failure. Keating, however, told the House Banking Committee that the FHLBB and its former chief Edwin J. Gray were pursuing a vendetta against him. Gray testified that several U.S. senators had approached him and requested that he ease off on the Lincoln investigation. It came out that these senators had been beneficiaries of $1.3 million (collective total) in campaign contributions from Keating.

This allegation set off a series of investigations by the California government, the United States Department of Justice, and the Senate Ethics Committee. The ethics committee's investigation focused on five senators: Alan Cranston (D-CA); Dennis DeConcini (D-AZ); John Glenn (D-OH); John McCain (R-AZ); and Donald W. Riegle, Jr. (D-MI), who became known as the Keating Five.

After months of testimony revealed that all five senators acted improperly to differing degrees, the senators continually said they were following the status quo of campaign funding practices. In August 1991, the committee concluded that Cranston, DeConcini, and Riegle's conduct constituted substantial interference with the FHLBB's enforcement efforts and that they had done so at the behest of Charles Keating. The committee recommended censure for Cranston and criticized the other four for "questionable conduct."

snip//

The only member of the Keating Five still in the U.S. Senate is John McCain.

[billyoc]

1. Abramoff and Cunningham are wearing jumpsuits right now for doing what

McCain and this lobbyist were doing.

This is definitely *not* a sex scandal, this lobbyist worked for the telecoms, for goodness' sake. The NY Times has more on this than they've let on to, they don't do sex scandals...

[malaise]

2. What was the role of Bush Inc. in the S & Ls

Their love for McCain is beyond strange.

[Ivote]

3. Neil Bush was involved

We are still paying for bailing out the savings & loan companies
In partial defense of McCain that's why we now have McCain-Feingold
As far as the NYT I do beleive they might have more info then they are saying now, but my question is why did they hold this from Dec?

[lonestarnot]

5. Oh and that McDrain Feingold crap worked well when McDrain decided that if his

campaign tanked he would take money from taxpayers to repay his fucking loan. What an absurd little man he is.

[havocmom]

6. Neil was Silverado Savings and Loan in Colorado. Keating was Lincoln Savings

The real culprit was deregulation and gutting funding for what little regulation was left.

Corporate ownership of politicians destroyed some pretty decent industries. Never enough profit for some. Never enough, so they eat their customers, employees, small investors, and finally, themselves. But they end up still hungry.

[L. Coyote]

18. Neil Bush managed a failed S&L! BUT, they love John for covering up Abramoff

in the Fall of 2004, saving Bush's election and that in the Senate and the House.

It seems this is why the Bushes and McCain altered their political dynamic!
Bush needed John in 2004, John needed Bush in 2008 (albeit he thought he
would benefit more from a Bush alliance that now must be quasi-covert).

[L. Coyote]

21. BUSH ZEROS IN ON VP MATE; ACTIVITY FOCUSES ON KEATING

DRUDGE REPORT - THURSDAY JUNE 29 2000 - BUSH ZEROS IN ON VP MATE; ACTIVITY FOCUSES ON KEATING **World Exclusive** Texas Governor George W. Bush is on the verge of selecting his running mate for the race to take the White House. Now, the DRUDGE REPORT, which was first to report that Sen. Dole had chosen Jack Kemp in '96 , can reveal: Okalahoma Governor Frank Keating is Bush's current choice for the slot! ....

from a freeper post! follow http://www.google.com/search?q=%22frank+keating%22+S%26L

[UpInArms]

26. here's background on the bushes and the S&Ls

TRUST OR HUSTLE: The Bush Record

NEIL BUSH. In 1990, federal regulators filed a $200-million lawsuit against Neil Bush and other officers of the Silverado Banking, accusing them of “gross negligence” contributing to its $1 billion collapse.1 “Our conclusion is that Silverado was the victim of sophisticated schemes and abuses by insiders and of gross negligence by its directors and outside professionals,” FDIC Senior Deputy General Counsel Douglas H. Jones said in a statement.2

Bush was reprimanded by the Office of Thrift Supervision for “multiple conflicts of interest” as a paid director of the S&L, including his approval of $132 million in loans from Silverado to two business partners, Bill Walters and Kenneth Good.3 Bush, in turn, had received $550,000 in salaries from a company funded by Walters and Good plus a $100,000 loan from Good that was subsequently forgiven.4 Walters and Good looted an estimated $330 million from Silverado; one Silverado director had shared instructions on how to establish family trusts to protect such secreted funds from repossession by the government.5

A top federal regulator testified to Congress that Washington officials postponed Silverado’s shutdown from October to December 1988, after George Bush’s presidential campaign was successfully culminated.6 The director of the Office of Thrift Supervision asked the Treasury Department to investigate whether political considerations caused the delay, but no such probe was conducted.7 Neil got off paying only $50,000 in a settlement of the $200 million federal suit against him other Silverado directors.8 He didn’t have to worry about his $250,000 legal bill, as Thomas Ashley, a friend of George Bush senior and the head of a banking association that was lobbying the federal government for bank deregulation, formed a legal defense fund to pay the bills.

<snip>

JEB BUSH. In 1987, Miguel Recarey, a longstanding business associate of Tampa Mafia boss Santos Trafficante, fled the U.S. under three indictments for labor racketeering, illegal wiretapping, and Medicare fraud.1 His firm, International Medical Centers (IMC), which was America’s largest health maintenance organization for the elderly and which had received $1 billion in Medicare funds, collapsed.2 Recarey’s HMO left $222 million in unpaid bills,3 and was suspected of up to $100 million in Medicare fraud.4 “IMC is the classic case of embezzlement of government funds,” said William Teich, who headed the U.S. Office of Labor Racketeering in Miami. Teich called it a “bust-out operation” where money was “drained out the back door” and disappeared down “a black hole.”5

<snip>

Jeb’s defaulted loan from Broward Federal Savings and Loan in Sunrise, Florida transpired as follows.16 On February 1, 1985, Broward Federal loaned $4,565,000 to real estate developer J. Edward Houston, secured only by Houston’s personal guarantee. The same day, a company headed by Houston turned around and loaned the same amount to a partnership of Jeb Bush and Miami real estate developer Armondo Codina for them to buy a five-story building in Miami’s financial district.

Curiously, the Bush-Codina partnership was required to repay the loan from Houston “only as, if and to the extent that the cash flow from the building was sufficient to support those payments.” In fact, Bush and Codina made no payments at all on the loan prior to the final default settlement. In 1987 Houston defaulted on the $4.5 million Broward Federal loan, and the S&L sued both him and the Bush-Codina partnership. In an unusual settlement with the FDIC, Bush and Codina were obligated to repay just $500,000 of the loan and got to keep the building in the Miami financial district that collateralized the loan.

(edited to clean up a messy post)

[havocmom]

4. McCain was a photogenic Republican with a history as warrior/POW

The GOP knew saving his butt would be an investment in a future puppet that may be marketable. Simple as that.

McCain looked to be in a lot of pain in 04 when he threw in the towel and literally embraced bush. Somebody called in the marker and McCain realized he wasn't a Maverick after all.

And, it's his wife who has the bank account. He cheated on her (hey, Cindy, when you marry a guy who cheated on his wife with you... Karma) and if she doesn't get to be First Lady, I'm guessing Ol John doesn't get as comfy a retirement as he was hoping.

And, that deregulation thing just keeps on doing serious harm to America. When to voters realize we need reps who understand capitalism works better with a few well enforced rules?

[blondeatlast]

8. Excellent summation. You hit every target there.

The Hensleys are a powerful family in Arizona (one of the biggest influences in maintaing our Right to be a Happy Wage Slave--er, WORK, legislation).

She's a political manipulator and the source of his power. He's her puppet and how she wants to be First Lady. If you think Nancy Reagan was creepy FL, well--I hope we never have to see Cindy Hensley-McCain. :scared:

[The Backlash Cometh]

11. Perhaps what we need is a timeline that shows all the financial scandals

that followed after every industry got deregulated?

From the thrifts to poisoned food.

[ReformedChris]

22. Both Heroes in the Keating 5 escaped. Don't forget John Glenn was in on it too..

And Glenn was in terrible financial shape for a long time because of his failed '84 Presidential Run. In this nation, heroes always seem to get the benefit of the doubt in these situations. Always gets brushed aside.

[blondeatlast]

7. Virtually the only difference in the Keating 5 scandal and today's subprime mess is that Lincoln

Savings was all about commercial real estate. The machinations are virtually identical.

The blogs and the water coollers need to spread the similarities far and wide. McCain is the ONLY politically active Keating 5 member.

[blondeatlast]

9. Two more gets this excellent and necessary refresher course on the Greatest page... nt

[The Backlash Cometh]

10. Thank you babylonsister. Great piece.

[Jeanette in FL]

12. "He has never violated the public trust"

When I heard this quote this morning, the first thing I thought was "The Keating Five", do they think that we have such a short memory. Thanks for posting this article.


Early this morning Mr McCain’s campaign team issued a statement. “McCain has a 24-year record of serving our country with honour and integrity,” the statement said. “He has never violated the public trust, never done favours for special interests or lobbyists, and he will not allow a smear campaign to distract from the issues at stake in this election.”

http://www.timesonline.co.uk/tol/news/world/us_and_americas/us_elections/article3408463.ece

[blondeatlast]

16. Jaw-dropping, isn't it? They really think we are that stupid.

Arizona is still recovering from the Lincoln Savings debacle and they honestly think we don't know how utterly up to his neck McCain was involved.

I find it outright insulting.

[madokie]

13. I couldn't find a link but I believe charles keatings brother is our past governor

frank keating, a sorry excuse of a human being

[NJmaverick]

14. Thanks for posting the ammo

Already used this information to shut down some right wing nut jobs, in an open forum.

[grace0418]

15. Hopefully this will get brought up A LOT.

But McCain will gloss over it.

[blondeatlast]

17. It's very reminiscent of the subprime crisis of today--the result of massive deregulation

and financial industry influence.

It's up to us to keep it out there. It's come up in every one of his senate campaigns and his handlers do everything they can to dflect it--but it visibly hurts hm even if he manages to win.

[midnight]

19. This was a bi-partisan scandal. Evidence that the two groups

can work together when it's mutual beneficial. I was sure that this story was going to lead to Neil Bush.

[blondeatlast]

20. K. nt

[annabanana]

23. Bookmarking for General Election fun!. . .!!

[snacker]

24. Barbara Walters talked about his on "The View" today...

jogging our memories.

[raincity_calling]

25. Besides the Keating scandal

take a look at some more of McCaine's history in Arizona. His father-in-law had close ties with the mob, and his father-in-law helped McCain get into politics.

Google the words - John McCain wife land fraud mob

[TexasObserver]

27. It's all I talk about when discussing McCain with people. Segue quickly to Keating Five.

"T.O., what do you think about this McCain sex scandal thing?"

That's between him and his wife. What we know is that he was much too cozy with a lobbyist, and that's been his history for a long time. Take the Keating Five Scandal, when he helped Keating pull over a massive fraud, cost taxpayers billions, and screwed retirees and others by his sleazy dealings.

"The Keating Five?"

Yes, the Keating Five. Google it, read it for ten minutes, and find out why you don't want McCain anywhere near the White House.

--------------------------------------------------------

There's a conversation I had ten times yesterday, and it's the direction we should take this, away from the sex and towards the Keating Five.