Wednesday, September 10, 2008
Can McCain be redefined as a crook?
When the Federal Government announced the bailout of Freddie Mac and Fannie Mae, did it remind you of anything? Did it remind you of another bailout that cost taxpayers billions of dollars? Did it remind you of something that happened about 20 years ago, in a time of similar economic doldrums? Did it remind you of when the government bailed out the S&L industry? The Lincoln Savings and Loan scandal of the late 1980’s-early 1990’s?
How many of you remember the Keating 5 Scandal? Senator McCain was one of the Keating 5 and back during the 2000 Republican Presidential Primaries Slate ran an article about McCain and his role in the scandal.
In the early 1980s, under the Reagan/Bush administration, the Savings and Loan industry was deregulated so much so that abuse and misuse of funds became easy, rampant, and went unchecked. The S&L scandal was the largest theft in the history of the world and it was US tax payers who were robbed. The cost to tax payers was over $1.4 TRILLION dollars (about one quarter of our national debt).
Charles Keating owned a savings and loan and he was illegally using the bank’s customers money to give loans to himself and friends, loans they didn’t have to repay. They speculated on risky real estate investments, (forbidden by law because it was one cause of the Great Depression) and McCain’s wife, Cindy, and her father, made a $359,000 investment in retail property owned by Charles Keating in 1986, a year before John McCain first met with federal regulators on behalf of Keating. Years later, Cindy McCain sold her investment for $15,000,000. Keating blew $3.4 billion through illegal personal loans and bad investments, and the FDIC had to reimburse Keating’s customers who had been ripped off.
When the feds first started investigating Keating, he wined, dined, and lavished on five U.S. Senators hundreds of thousands of dollars in campaign donations and personal gifts. McCain filed false income tax returns to hide the thousands of dollars in gifts that he got from Keating. Keating was influence peddling, contributing heavily to the election campaigns of these senators. The five senators met with federal banking regulators and allegedly lobbied for favorable treatment for Lincoln Savings and Loan. When the IRS found Keating’s company had written off the gifts as business expenses (influence peddling is tax deductible?), McCain admitted to filing false returns and then he leaked information about the Keating Five to the press in an effort to appear above the other Senators in the scandal. A 1989 article was titled, "McCain: The Most Reprehensible of the Keating Five."
Keating had asked the five Senators to influence the feds, and the Senators, the Keating Five, met with federal investigators and pressured them to stop investigating Keating. They bought Keating some time, but the feds still nailed Keating. He was convicted on 73 counts of fraud, conspiracy, and other crimes.
Keating wasn’t the only Savings and Loan owner who committed fraud, about 20% of the S&L’s that failed during that time were caused by fraud and/or insider trading. The failure of the Lincoln Savings and Loan and other S&L’s pushed the country into a recession, costing the U.S. government $126 billion dollars in FDIC insurance payouts to investors. This happened during George H.W. Bush's term and he pushed through the S&L bailout and then his son Neil Bush was charged with criminal wrongdoing in the case of Silverado S&L. He was sentenced to 3.5 years in jail for pleading guilty to $8.7 million in theft. (You'd get more jail time for holding up a gas station for $50.)
John McCain was formally rebuked by the Senate Ethics Committee for exercising “poor judgment” for intervening with the federal regulators on behalf of Keating, but because McCain accepted Keating’s gifts of travel and vacations to Bahama while McCain was a member of the House of Representatives the Senate claimed they had no jurisdiction to censure McCain at that time.
McCain has successfully defined himself as a war-hero and a maverick reformer, but using material like this he could easily be redefined as a crook. McCain lobbied for a crook to get him favorable treatment and helped him perpetrate his fraud. McCain claims he wants to eliminate pork and wasteful spending, yet he helped these S&L guys steal millions from the taxpayers in a scandal that cost billions overall. That costs us more than all the pork McCain might have ever saved us from. Keating was essentially stealing money from the government because the savings and loan funds were federally insured deposits.
Considering the lying 30-second TV attack ad used against Obama's record on education, saying that Obama backed legislation to teach sex education to kindergartners with an announcer saying, "Learning about sex before learning to read? Barack Obama. Wrong on education. Wrong for your family," I think Obama ought to fight back with an ad featuring McCain as one of the Keating 5.
I read through another article: "Both McCain and Obama have ties to loan giants," from the Herald Tribune.
It notes that for all the outrage they express, neither Obama, with less than four years in the Senate, and McCain, after a quarter-century in the House and Senate, has a record of directly challenging the companies. All the more reason for Obama to make an ad in which he promises to insist on proper regulation.
Other useful factoids from the article:
1) Obama did warn publicly of a coming housing crisis in March 2007, five months before it erupted and the government first took action.
2) McCain's campaign manager, Rick Davis, a longtime lobbyist. Davis previously was head of the Homeownership Alliance, a coalition of banks and housing industry interests led by Fannie and Freddie to stave off regulations. McCain's confidant and adviser Charlie Black, whose firm worked for Freddie Mac for several years ending in 2005, and the deputy campaign finance chairman, Wayne Berman, a vice president for Ogilvy Worldwide and a former Fannie Mae lobbyist.
3) Six members of the Republican lobbying firm Fierce Isakowitz & Blalock, all Fannie Mae lobbyists, have given McCain $13,250.
4) The New York investor Geoffrey Boisi, a member of Freddie Mac's board, contributed more than $70,000 to McCain and Republican Party committees working for his election. Both he and Richard Hohlt, a Fannie Mae lobbyist, are among the McCain "bundlers" who have raised $100,000 to $250,000 from others, according to the campaign Web site.
They did it:
The Obama camp released this 30-second trailer for a 13-minute video highlighting McCain's connection to the scandal that will be released in full soon on the website keatingeconomics.com: