This is part 2 of a look at McCain's ties to lobbyists, special interests, etc. And now for the king daddy of scandals, the Keating Five. It’s complicated, but here’s the gist.
In 1987, McCain attended two meetings with federal banking regulators to discuss an investigation into Lincoln Savings and Loan, owned by Arizona developer Charles Keating. Federal auditors were investigating Keating's banking practices. Keating, afraid the government would seize his bank, sought intervention from a number of U.S. senators, including - you guessed it - John McCain.
At Keating's urging, four senators--McCain, Dennis DeConcini, Alan Cranston and John Glenn -- met with Ed Gray, chairman of the Federal Home Loan Bank Board, on April 2. Again at Keating's urging, those four senators plus Sen. Don Riegle, D-Mich., attended a second meeting on April 9 with bank regulators in San Francisco.
Regulators seized Lincoln Savings and Loan two years later. The bailout cost taxpayers $2.6 billion, making it the biggest of the S&L scandals. Investors in the S&L lost $190 million. Keating was convicted in January 1993 of 73 counts of wire and bankruptcy fraud, which was later reduced to four counts of fraud.
In November 1990, the Senate Ethics Committee launched an investigation into the meetings between the senators and the regulators. McCain, Cranston, DeConcini, Glenn, and Riegle became known as the Keating Five.
McCain defended his actions saying Keating was a constituent. He claimed that he only wanted to know only whether Keating was being treated fairly.
The truth is Keating was more than a constituent --he was a longtime friend and associate. Keating raised money for McCain's 1982 and 1984 congressional campaigns as well as his 1986 Senate race. By 1987, McCain's campaigns had received $112,000 from Keating, his relatives, and his employees--the most received by any of the Keating Five. (Keating raised a total of $300,000 for the five senators.)
After McCain's election to the House in 1982, he and his family made at least nine trips at Keating's expense, including three to Keating's Bahamas retreat. McCain did not disclose the trips, as required under House rules, until the scandal broke.
In April 1986, McCain's wife, Cindy, and her father invested $359,100 in a Keating strip mall.
The Senate Ethics Committee probe of the Keating Five began in November 1990. Eventually, the Senate Ethics Committee found McCain and Glenn to be the least blameworthy of the five senators.
While this put the scandal to rest, it sheds some light on McCain. He has built his entire personna around bucking the system of political favors and the mentality: you scratch my back, I'll scratch yours. But his actions say otherwise. The whole mess leaves me pretty itchy, like a bad rash.