John McCain, Charles Keating and the $2.3 billion taxpayer bailout

When it comes to having good judgment, John McCain certainly has had his lapses. Whether it was his tremendous leadership during Hurricane Katrina or it is his flip flop and double talk with respect to his own campaign finances, or whether it is his pandering to the very people that he railed against and who sold him down the river a few years back or whether it is losing his temper to his own republican colleagues in the Senate, the list is long.

But the most notable is the background behind McCain’s “transformation” on campaign finance reform – his relationship with Charles Keating, his wife’s relationship with Keating, the financial entanglement between the McCains and Keating and the $2.3 billion that We the People paid to bailout Lincoln Savings & Loan as a result.

Yes, this is old news, but when you talk about more than $100,000 in contributions by Keating to McCain’s campaigns in the 80’s, as well as close to $400,000 in money invested by Cindy McCain and her father in a business venture with Charles Keating and multiple personal trips at Keating’s expense and on his company’s airplane as well as money being siphoned to political campaigns, well, it is worth rehashing.

No wonder Cindy McCain is proud of America – look at what it does for people that have her money and connections.

Brief Background

During the Savings and Loan crisis in the 1980s, one institution, the Lincoln Savings & Loan was owned by American Continental Corporation – which was run by Charles Keating. Due to “bad loans”, it became insolvent. When Keating made some shady deals regarding selling real estate investments that caught the eye of federal investigators, he asked McCain and 4 other Senators (hence the “Keating 5”) to whom he made donations for some political cover (read: quash the investigation).

According to Slate.com:

At Keating's behest, four senators--McCain and Democrats Dennis DeConcini of Arizona, Alan Cranston of California, and John Glenn of Ohio--met with Ed Gray, chairman of the Federal Home Loan Bank Board, on April 2. Those four senators and Sen. Don Riegle, D-Mich., attended a second meeting at Keating's behest on April 9 with bank regulators in San Francisco.

Regulators did not seize Lincoln Savings and Loan until two years later. The Lincoln bailout cost taxpayers $2.6 billion, making it the biggest of the S&L scandals. In addition, 17,000 Lincoln investors lost $190 million.

McCain and the other four Senators wanted the investigation into Keating to end and tried to prematurely shut it down. Eventually, Keating was convicted, served in prison before his sentence was overturned and he was charged with additional crimes, for which his sentence was “time served” of four years.

Financial relationship between John and Cindy McCain and Charles Keating

So here is where Ms. “Proud to be an America” McCain and the “straight talker” himself come in. McCain likes to claim that Keating was “just a constituent” that he was helping out, but if you look even the smallest bit below the surface, you will find how much “straight talk” there is there. Recall that this scandal was in the mid to late 1980s, with the investigation into Lincoln starting in 1987. Coincidentally, 1987 was the first year McCain was in the Senate, after two terms in the House.

Let’s start with John’s campaign donations from his “constituent”. Among the Keating 5, McCain received the most in contributions – around $112,000 between 1982 and 1987. But it wasn’t just the campaign contributions that McCain received. Again, from the Slate article:

After McCain's election to the House in 1982, he and his family made at least nine trips at Keating's expense, three of which were to Keating's Bahamas retreat. McCain did not disclose the trips (as he was required to under House rules) until the scandal broke in 1989. At that point, he paid Keating $13,433 for the flights.

Not only the contributions. Not only the multiple trips on Keating’s expense (well, really the taxpayers, since it was the taxpayers who bailed him out). But breaking House rules by not disclosing this until after he ran interference for Keating and the scandal broke.

How’s that for straight talk?

But this all pales in comparison to what pill popper and thief Cindy’s relationship was with Keating. As reported by the Arizona Republic, right around the time that the scandal was heating up (but before the investigations began), Ms. “I’m proud of America because I not only had my own illegal activities with pain killers covered up but also got financially involved with a felon and got away with it” had a serious financial tie to Keating:

On Oct. 8, 1989, The Republic revealed that McCain's wife and her father had invested $359,100 in a Keating shopping center in April 1986, a year before McCain met with the regulators.

---snip---

When the story broke, McCain did nothing to help himself. When reporters first called him, he was furious. Caught out in the open, the former fighter pilot let go with a barrage of cover fire. Sen. Hothead came out in all his glory.

''You're a liar,''' McCain snapped Sept. 29 when a Republic reporter asked him about business ties between his wife and Keating.

''That's the spouse's involvement, you idiot,'' McCain said later in the same conversation. ''You do understand English, don't you?''

He also belittled the reporters when they asked about his wife's ties to Keating.

But the reporter wasn’t the liar. Senator Hothead was the liar. And his actions to cover up and obstruct justice resulted in a huge cost to the American taxpayers while his friend, campaign contributor, “constituent” stole money and bilked investors.

I wonder how much less this would have cost We the People had Mr. straight-talking-campaign-finance-reformer-“maverick” not intervened and obstructed justice for his buddy.