McCain and the Keating Five

Chip Shields

A week or so ago, I wrote a post entitled The Best Way to Rob a Bank is to Own One that urged Sen. Smith to listen to people like William K. Black who fought for the public interest as Director of Litigation for the Federal Home Loan Bank Board during the S & L crisis and Keating Five scandals of the 1980s, and not to the financial lobbyists in Washington who helped get us into this mess.

Well it looks like the Obama campaign is ready to tie McCain's past trangressions as a member of the Keating Five to our current economic nightmare.

Go to tomorrow to watch Obama lower the boom. It looks like Bill Black, author of The Best Way to Rob a Bank is to Own One, has a role in the documentary.

  • Ray Duray (unverified)

    Thanks for the links, Chip.

    Readers may not know that in addition to John McCain's role in attempting to strong-arm and intimidate regulators that his wife Cindy McCain also had a role to play. According to Robert Scheer of, Cindy McCain availed herself of an opportunity to purchase properties that ended up in the Resolution Trust Corporation and was eventually able to net about a $1 Million profit on her purchases.

    This is a particularly galling example of insider dealing, as I well know from my efforts to negotiate with RTC when I found to my chagrin that only people of Cindy McCain's status and connections would be permitted to bid on distressed properties that the "public" RTC was auctioning. In other words, the fix was in on both ends of the S&L bonanza for insiders.

  • Bill R. (unverified)

    I believe the full 13 min. video will not be available at that website until 9 AM Mon. McCain wanted to "turn the page" to take the economy off the table in the election.. that's a real hoot! "Turn the page" on disaster? So he wants to talk about 1960s radicals when Obama was 8 years old. Well the roots of today started in the S&L crisis of the 1980s, and McCain was taking protection money from Charles Keating, one of the top thieves of the S&L crisis. McCain got caught but has continued in his ways to the present. Perhaps he can give us all a good explanation on Tues. night.

  • joe (unverified)

    Here is what some people said about the Federal Loan agencies (WSJ, Oct 2, 2008):

    House Financial Services Committee hearing, Sept. 10, 2003:

    Rep. Barney Frank (D., Mass.): I worry, frankly, that there's a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios. . . .

    Rep. Maxine Waters (D., Calif.), speaking to Housing and Urban Development Secretary Mel Martinez:

    Secretary Martinez, if it ain't broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals?


    House Financial Services Committee hearing, Sept. 25, 2003:

    Rep. Frank: I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing. . . .


    House Financial Services Committee hearing, Sept. 25, 2003:

    Rep. Gregory Meeks, (D., N.Y.): . . . I am just pissed off at Ofheo [Office of Federal Housing Enterprise Oversight] because if it wasn't for you I don't think that we would be here in the first place.

    And Freddie Mac, who on its own, you know, came out front and indicated it is wrong, and now the problem that we have and that we are faced with is maybe some individuals who wanted to do away with GSEs in the first place, you have given them an excuse to try to have this forum so that we can talk about it and maybe change the direction and the mission of what the GSEs had, which they have done a tremendous job. . .

    Ofheo Director Armando Falcon Jr.: Congressman, Ofheo did not improperly apply accounting rules; Freddie Mac did. Ofheo did not try to manage earnings improperly; Freddie Mac did. So this isn't about the agency's engagement in improper conduct, it is about Freddie Mac. Let me just correct the record on that. . . . I have been asking for these additional authorities for four years now. I have been asking for additional resources, the independent appropriations assessment powers.

    Brian Carney of the Editorial Board on the hearings Congresspeople don't want to remember. (Oct. 2)

    This is not a matter of the agency engaging in any misconduct. . . .

    Rep. Waters: However, I have sat through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke. Housing is the economic engine of our economy, and in no community does this engine need to work more than in mine. With last week's hurricane and the drain on the economy from the war in Iraq, we should do no harm to these GSEs. We should be enhancing regulation, not making fundamental change.

    Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals. . . .

    Rep. Frank: Let me ask [George] Gould and [Franklin] Raines on behalf of Freddie Mac and Fannie Mae, do you feel that over the past years you have been substantially under-regulated?

    Mr. Raines?

    Mr. Raines: No, sir.

    Mr. Frank: Mr. Gould?

    Mr. Gould: No, sir. . . .

    Mr. Frank: OK. Then I am not entirely sure why we are here. . . .

    Rep. Frank: I believe there has been more alarm raised about potential unsafety and unsoundness than, in fact, exists.


    Senate Banking Committee, Oct. 16, 2003:

    Sen. Charles Schumer (D., N.Y.): And my worry is that we're using the recent safety and soundness concerns, particularly with Freddie, and with a poor regulator, as a straw man to curtail Fannie and Freddie's mission. And I don't think there is any doubt that there are some in the administration who don't believe in Fannie and Freddie altogether, say let the private sector do it. That would be sort of an ideological position.

    Mr. Raines: But more importantly, banks are in a far more risky business than we are.


    Senate Banking Committee, Feb. 24-25, 2004:

    Sen. Thomas Carper (D., Del.): What is the wrong that we're trying to right here? What is the potential harm that we're trying to avert?

    Federal Reserve Chairman Alan Greenspan: Well, I think that that is a very good question, senator.

    What we're trying to avert is we have in our financial system right now two very large and growing financial institutions which are very effective and are essentially capable of gaining market shares in a very major market to a large extent as a consequence of what is perceived to be a subsidy that prevents the markets from adjusting appropriately, prevents competition and the normal adjustment processes that we see on a day-by-day basis from functioning in a way that creates stability. . . . And so what we have is a structure here in which a very rapidly growing organization, holding assets and financing them by subsidized debt, is growing in a manner which really does not in and of itself contribute to either home ownership or necessarily liquidity or other aspects of the financial markets. . . .

    Sen. Richard Shelby (R., Ala.): [T]he federal government has [an] ambiguous relationship with the GSEs. And how do we actually get rid of that ambiguity is a complicated, tricky thing. I don't know how we do it.

    I mean, you've alluded to it a little bit, but how do we define the relationship? It's important, is it not?

    Mr. Greenspan: Yes. Of all the issues that have been discussed today, I think that is the most difficult one. Because you cannot have, in a rational government or a rational society, two fundamentally different views as to what will happen under a certain event. Because it invites crisis, and it invites instability. . .

    Sen. Christopher Dodd (D., Conn.): I, just briefly will say, Mr. Chairman, obviously, like most of us here, this is one of the great success stories of all time. And we don't want to lose sight of that and [what] has been pointed out by all of our witnesses here, obviously, the 70% of Americans who own their own homes today, in no small measure, due because of the work that's been done here. And that shouldn't be lost in this debate and discussion. . . .


    Senate Banking Committee, April 6, 2005:

    Sen. Schumer: I'll lay my marker down right now, Mr. Chairman. I think Fannie and Freddie need some changes, but I don't think they need dramatic restructuring in terms of their mission, in terms of their role in the secondary mortgage market, et cetera. Change some of the accounting and regulatory issues, yes, but don't undo Fannie and Freddie.


    Senate Banking Committee, June 15, 2006:

    Sen. Robert Bennett (R., Utah): I think we do need a strong regulator. I think we do need a piece of legislation. But I think we do need also to be careful that we don't overreact.

    I know the press, particularly, keeps saying this is another Enron, which it clearly is not. Fannie Mae has taken its lumps. Fannie Mae is paying a very large fine. Fannie Mae is under a very, very strong microscope, which it needs to be. . . . So let's not do nothing, and at the same time, let's not overreact. . .

    Sen. Jack Reed (D., R.I.): I think a lot of people are being opportunistic, . . . throwing out the baby with the bathwater, saying, "Let's dramatically restructure Fannie and Freddie," when that is not what's called for as a result of what's happened here. . . .

    Sen. Chuck Hagel (R., Neb.): Mr. Chairman, what we're dealing with is an astounding failure of management and board responsibility, driven clearly by self interest and greed. And when we reference this issue in the context of -- the best we can say is, "It's no Enron." Now, that's a hell of a high standard.

  • Bill R. (unverified)

    McCain has decided he will lose if people are thinking about the economic crisis, so he wants to talk about the 1960s and associate the 8 year old Barack Obama with the Weather Underground. Fact chance.. and with such a surrogate in Palin, whose husband has been a member of a secessionist party that has a passionate hatred of America, the Alaskan Independence Party, and who has attended their conventions. Meanwhile the Dow is under 10 thousand today and people are receiving their quarterly 401k statements to find out how much they are impoverished by right wing deregulation of the financial markets. -McCain's course correction reflects a growing case of nerves within his high command as the electoral map has shifted significantly in Obama's favor in the past two weeks.

    "It's a dangerous road, but we have no choice," a top McCain strategist told the Daily News. "If we keep talking about the economic crisis, we're going to lose."

  • Bill R. (unverified)

    Apparently to get us to not think about the economy McCain want us to think about character. Along those lines the Washington Post has an article about John McCain's adultery and switching of wives to advance his political career.

    "Carol Shepp McCain, then 42, had endured much in more than 14 years of marriage to John. She had raised their three young children alone while her husband languished in a North Vietnamese prison camp for 5 1/2 years. Her tribulations grew immeasurably after a near-fatal car accident that immobilized her for months and left her scarred for life. Despite their reunion and physical rehabilitation, by the late 1970s the McCains' marriage had begun to crack, as John engaged in what he later termed "dalliances" with other women.
    Now it was being torn apart by his relationship with Cindy Hensley. McCain didn't hesitate in bringing his marriage to a swift end.
    According to public records, he and Cindy received a marriage license in Maricopa County, Ariz., in early March 1980, four weeks before his divorce from Carol was final. A judge in Florida dissolved the McCains' marriage April 2, entering a default judgment after Carol failed to respond to three court summonses. John and Cindy were wed six weeks later, on May 17.
    This rapid-fire sequence of events raises a question about John McCain's path to the White House: Would he be where he is today had he not changed his life, and his wife, when he did?"
  • Charles Keating (unverified)

    Hey, no fair....this is America. History isn't important. There you go again Chip, say it isn't so, always looking backwards......

  • Bill R. (unverified)

    This is why McCain doesn't want to focus on the economy-

    Today's polling thus far:

    PA Morning call daily tracker: Obama 49 McCain 38 (O+11)

    SUSA New Hampshire: Obama 53 McCain 40

    SUSA Virginia: Obama 53 McCain 43

    Suffolk Virginia: Obama 51 McCain 39

  • Bill R. (unverified)

    The full 13 minute video on McCain and the Keating scandal is now up. This is the better location on Quicktime:

  • (Show?)

    In Total Recall, when Michael Ironside's character is finally turned loose to kill Arnie, his response is to the point:

    It's about Goddamned time!

    After sitting through Gore and Kerry meekly ignoring the Exceremental Deluge that directly preceded both elections, it pretty refreshing to see that the New Guy is not going to "lie back and enjoy it".

    Go get 'em Barack.........

  • Bill Bodden (unverified)

    Meanwhile the Dow is under 10 thousand today and people are receiving their quarterly 401k statements to find out how much they are impoverished by right wing deregulation of the financial markets.

    As long as we put partisan spin on this nation's problems your national leaders from the corporate parties - Democratic and Republican - will continue to dig us into a deeper hole.

    Dennis Kucinich on the Democrats’ Bailout Betrayal.

    To prove my hostility is bi-partisan check this latest McCain rap sheet.

    World Markets Tank in Wake of Bailout Passage; Dow Dips Below 10,000. Now, that is Congressional bi-partisanship at work with Wall Street.

  • Jiang (unverified)

    So, just imagine the fast boat vets where a bunch of bankers. Yeah, he's toast!

  • Jiang (unverified)

    BTW, those that have listened to Jiang financial advise for the last 10 years have hear the constant mantra "the Dow is a fraud above 10,000".

    As money moves into reality this has been vindicated.

  • RichW (unverified)

    For McCain: Picking Palin was a tragic mistake. "The fundamentals of the Economy are strong" was a mistake. "Suspending" his campaign was a mistake. Going negative is yet another mistake.

    With these misjudgements, Obama gets more points for his own judgement while McCain gets buried in the polls.

    Four weeks to go and the race is Obama's to win or lose. McCain has lost his credibility (and maybe his sanity).

  • RW (unverified)

    Watch for voter fraud attack to develop, fully, in the next week or so. Voter turnout efforts in Ohio were reported on last week in a positive, informational light. But now "teaser" stories are showing up on conservative links pages and being tickled on by less than respectable news sources.

    The next major attack initiative that will come will relate to the "bussing" of homeless from "soup kitchens to vote for Obama with nearly no questions asked".

    Remember when the homeless of SF were bussed one-way to Oregon by the denizens of Rajneeshpuram, then dumped onto various townships after their votes were used and done with? This is the spectre that will be entertained in the media or by McCain's campaign next. Use of the vulnerable by a slick machine.

    I smell the setup to characterization as a Vote Boss instead of exploration of the physiognomy of activism on behalf of the utterly disenfranchised potential voters.

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