What Every American Voter Should Know About John McCain

WASHINGTON: Source – The Boston Globe – As William K. Black, author of The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&L Industry, watches John McCain move toward the Republican presidential nomination, he thinks of a day 21 years ago that he considers one of the most troubling of his life.

Black, a senior federal savings and loan regulator at the time, attended a meeting at which he felt McCain and four other senators pressured federal regulators to back off from investigating the troubled Lincoln Savings and Loan.

“I remain very upset that what they did caused such damage,” said Black, now a professor at the University of Missouri at Kansas City, recalling how Lincoln’s bankruptcy cost the government $3 billion. Moreover, he said he believes McCain intervened partly because his wife had invested money with Lincoln chairman Charles Keating, a campaign contributor who let the McCains use his home in the Bahamas.Black, however, maintains that the Keating case was a textbook example of politicians, McCain among them, serving a major donor. And Dennis DeConcini, a former Democratic senator from Arizona and another of the Keating Five who hosted the key meeting in his office, said in an interview that McCain has gotten a relatively “free ride” even though DeConcini insists that McCain was the “most culpable” of the senators because he had the closest relationship with Keating.

McCain met Keating in 1982, during McCain’s successful run for Congress, and soon began accepting offers from Keating to fly McCain’s family on a corporate plane to Keating’s house in the Bahamas. McCain did not pay for most of the trips until years later, when the matter became public.

Keating, meanwhile, complained regularly to McCain that a proposed regulation would hurt his business. Known as the “direct investment” rule, it limited the amount that savings-and-loan institutions could invest from their assets. In 1985, after having “heard frequently from Charlie on the matter,” McCain decided that Keating’s complaints “were sound enough to warrant our assistance.” He cosponsored a resolution sought by Keating, but it failed to postpone the regulation, McCain wrote in his autobiography.

By then, Keating was one of McCain’s most important benefactors; McCain received $112,000 in campaign donations from Keating and his Lincoln associates, mostly between 1982 and 1986.

In the summer of 1986, while McCain was running for the Senate, the banking executive wrote him letters castigating the regulators. “The [bank board] is a mad dog turned loose in a police state,” Keating wrote in one of them. Weeks later, McCain accepted another trip aboard Keating’s jet to the Bahamas.

“I genuinely liked him and enjoyed being around him, especially on those occasions when Cindy and I and our oldest child, Meghan, were invited to his family’s vacation home in the Bahamas,” McCain wrote in his book. “I was never concerned that the time I spent enjoying Charlie’s company would raise public doubts about my judgment.”

With McCain having failed to postpone the regulation limiting investments by a savings and loan, Keating wanted him and other senators to get the Federal Home Loan Bank Board to grant Lincoln an exemption from the rule. McCain subsequently attended two meetings with regulators.

McCain said he felt he had a responsibility to a constituent whose company had 2,000 employees. Yet McCain had reason to be wary. His closeness to Keating had been an issue in his 1986 campaign, and aides urged him not to go to the meetings.

Four senators, including McCain, met with Edwin Gray, the chairman of the Federal Home Loan Bank Board in Washington that April in 1987. When Gray returned from the meeting, he told Black he was “very upset” that the senators were trying to pressure him, according to Black’s Senate testimony. Gray told Black to attend a follow-up meeting and take notes. Gray could not be reached for comment.

In the end, McCain received only a mild rebuke from the Ethics Committee for exercising “poor judgment” for intervening with the federal regulators on behalf of Keating. Still, he felt tarred by the affair.

“The appearance of it was wrong,” McCain said. “It’s a wrong appearance when a group of senators appear in a meeting with a group of regulators because it conveys the impression of undue and improper influence. And it was the wrong thing to do.”

McCain noted that Bennett, the independent counsel, recommended that McCain and Glenn be dropped from the investigation.

“For the first time in history, the Ethics Committee overruled the recommendation of the independent counsel,” McCain said. For his part, DeConcini is critical of McCain’s role in the affair. The two senators never were particularly cozy, and the stress of the public scrutiny worsened their relations.

In his memoir Senator Dennis DeConcini: From the Center of the Aisle, he praises the decision to keep McCain on the hook.

“It became clear to me, and it was later confirmed by Ethics Committee members, that Bennett was attempting to dismiss the charges against McCain, and in order to appear nonpartisan, he included Glenn in this effort,” DeConcini wrote with co-author Jack August. “Thanks to the three Democrats on the committee and perhaps with the help of Senator (Jesse) Helms (R-N.C.), however, the charges remained in place for all the senators under investigation. So all of us had to attend the 23-day public hearing, which was indeed a trial, before the six-member Senate Ethics Committee.”

In the book, DeConcini reiterates his allegation that McCain leaked to the media “sensitive information” about certain closed proceedings in order to hurt DeConcini, Riegle and Cranston. It’s a fairly serious charge. The Boston Globe revisited the Keating Five leaks in 2000. The story paraphrased a congressional investigator, Clark B. Hall, as personally concluding that “McCain was one of the principal leakers.” The newspaper also reported that McCain, under oath, had denied involvement with the leaks.

McCain owns up to his mistake this way:

“I was judged eventually, after three years, of using, quote, poor judgment, and I agree with that assessment.”