KEATING ECONOMICS: John McCain & The Making of a Financial Crisis

John McCain would like everyone to forget he was one of five Senators up to their corrupt behinds in the The Keating Five Savings & Loan scandal of the 1980s and early 1990s. The Senate Ethics Committee stated “Senator McCain exercised poor judgment.” Somethings never change.

In a July 1996, General Accounting Report (GAO); Financial Audit: Resolution Trust Corporation’s 1995 and 1994 Financial Statements; the cost of the crisis is estimated to have totaled around $160.1 billion, about $124.6 billion of which was directly paid for by the U.S. taxpayer.

The 13 minute film below details McCain’s involvement and the gifts he received in return for political favors. Deregulation and the practices used in the savings and loan crisis are parallel to the current subprime mortgage crisis and the economic mess we are in today. Obviously McCain never learned anything about economics.

According to a 2001, National Review Online Article:

In John McCain’s America, any politician who accepts a large contribution or gift from a donor, and then takes steps consistent with the donor’s interests — even though there is no legal quid pro quo — is corrupt. Well, then, by his own standard, McCain is corrupt.

Simply put, the issue was whether McCain and the other senators used their official positions to attempt to pressure Federal Home Loan Bank Board officials to go easy on the troubled institution. Eventually Lincoln went bust, costing depositors and taxpayers millions.

In its final report (November 20, 1991), here is what the Senate Select Committee on Ethics concluded about McCain’s conduct:

“Mr. Keating, his associates, and his friends contributed $56,000 for Senator McCain’s two House races in 1982 and 1984, and $54,000 for his 1986 Senate race. Mr. Keating also provided his corporate plane and/or arranged for payment for the use of commercial or private aircraft on several occasions for travel by Senator McCain and his family, for which Senator McCain ultimately provided reimbursement when called upon to do so. Mr. Keating also allowed Senator McCain and his family to vacation with Mr. Keating and his family, at a home provided by Mr. Keating in the Bahamas, in each of the calendar years 1983 through 1986

“…[F]rom 1984 to 1987, Senator McCain took actions on Mr. Keating’s behalf or at his request. The Committee finds that Senator McCain had a basis for each of these actions independent of the contributions and benefits he received from Mr. Keating, his associates and friends. “Based on the evidence available to it, the Committee has given consideration to Senator McCain’s actions on behalf of Lincoln. The Committee concludes that, given the personal benefits and campaign contributions he had received from Mr. Keating, Senator McCain exercised poor judgment in intervening with the regulators without first inquiring as to the Bank Board’s position in the case in a more routine manner.

KEATING ECONOMICS: John McCain & The Making of a Financial Crisis