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==Peripheral role of Glenn and McCain==
==Peripheral role of Glenn and McCain==
{{seealso|House and Senate career of John McCain, 1982–2000}}
{{seealso|House and Senate career of John McCain, 1982–2000}}
Senators McCain and Glenn were not central figures in the controversy.<ref>Regens, James and Gaddie, Ronald.[http://books.google.com/books?id=xsVEhSJzmIIC&dq=%22John+Glenn%22+keating&lr=&as_brr=3&source=gbs_summary_s&cad=0 “The Economic Realities of Political Reform: Elections and the U.S. Senate”], page 6 (Cambridge University Press 1996).</ref> McCain was included in the investigation primarily so that there would be at least one Republican target.<ref name="Tolchin">Tolchin, Martin. [http://books.google.com/books?id=J6KSpXfgDMMC&pg=PA51&dq=%22Keating+Five%22&ei=rYh9SOzkBYa4jgHH57HwDw&sig=ACfU3U0Q8sfOYv0EbjJj0De1KVWyJDiHpQ "Glass Houses: Congressional Ethics and the Politics of Venom"], page 51 (2003).</ref><ref name="Bennett">{{cite web | title = Bob Bennett Reacts to New York Times Story on John McCain | url=http://www.foxnews.com/story/0,2933,331651,00.html| accessdate = 2008-02-25 | date = [[February 21]], [[2008]] |publisher = Fox News Channell |author = Sean Hannity and Alan Colmes }}</ref><ref name="Mitchell">Mitchell, Andrea. [http://books.google.com/books?id=aG4Qfc9gcfAC&pg=PA147&dq=%22John+Glenn%22+and+%22mccain%22+and+%22keating+three%22&lr=&as_brr=3&ei=_3p-SJvcHZPgiQGm5diLBg&sig=ACfU3U2LpXqEiwbGBaSVQEMC8SboF0u7Qg “Talking back: To Presidents, Dictators, and Assorted Scoundrels”], pages 147-148 (Penguin 2006).</ref> Glenn's inclusion in the investigation has been attributed to Republicans who were angered by the inclusion of McCain, as well as Democrats who thought Glenn's heroic image as a straight arrow would make the remaining three Democratic Senators look better.<ref name="Tolchin" /><ref name="Mitchell" /> Democrat [[Robert S. Bennett]], who was the special investigator during the scandal, suggested to the [[Senate Ethics Committee]] that it pursue charges against neither McCain nor Glenn.<ref name="Bennett" />
Senators McCain and Glenn were not central figures in the controversy.<ref>Regens, James and Gaddie, Ronald.[http://books.google.com/books?id=xsVEhSJzmIIC&dq=%22John+Glenn%22+keating&lr=&as_brr=3&source=gbs_summary_s&cad=0 “The Economic Realities of Political Reform: Elections and the U.S. Senate”], page 6 (Cambridge University Press 1996).</ref> Democrat [[Robert S. Bennett]], who was the special investigator during the scandal, suggested to the [[Senate Ethics Committee]] that it pursue charges against neither McCain nor Glenn.<ref name="Bennett" />


McCain and Keating had become personal friends following their initial contacts in 1981.<ref name="alex-k5-1"/> Between 1982 and 1987, McCain had received $112,000 in lawful<ref name="nyt-sen-eth"/> political contributions from Keating and his associates.<ref>{{cite news | url=http://www.reason.com/news/show/35983.html | title=How John McCain Reformed | author=[[Jacob Sullum|Sullum, Jacob]] | publisher=''[[Reason (magazine)|Reason]]'' | date=2005-03-11}}</ref> In addition, McCain's wife Cindy and her father [[Jim Hensley]] had invested $359,100 in a Keating shopping center in April 1986, a year before McCain met with the regulators. McCain, his family, and their baby-sitter had made nine trips at Keating's expense, sometimes aboard Keating's jet. Three of the trips were made during vacations to Keating's opulent Bahamas retreat at Cat Cay. McCain did not pay Keating (in the amount of $13,433) for some of the trips until years after they were taken, after he learned that Keating was in trouble over Lincoln.<ref>[http://www.azcentral.com/news/specials/mccain/articles/0301mccainbio-chapter7.html azcentral.com]</ref><ref>{{cite news | author=Rasky, Susan | url=http://query.nytimes.com/gst/fullpage.html?res=950DE6DF1031F931A15751C1A96F948260 | title=To Senator McCain, the Savings and Loan Affair Is Now a Personal Demon | publisher=''[[The New York Times]]'' | date=1989-12-22}}</ref>
McCain and Keating had become personal friends following their initial contacts in 1981.<ref name="alex-k5-1"/> Between 1982 and 1987, McCain had received $112,000 in lawful<ref name="nyt-sen-eth"/> political contributions from Keating and his associates.<ref>{{cite news | url=http://www.reason.com/news/show/35983.html | title=How John McCain Reformed | author=[[Jacob Sullum|Sullum, Jacob]] | publisher=''[[Reason (magazine)|Reason]]'' | date=2005-03-11}}</ref> In addition, McCain's wife Cindy and her father [[Jim Hensley]] had invested $359,100 in a Keating shopping center in April 1986, a year before McCain met with the regulators. McCain, his family, and their baby-sitter had made nine trips at Keating's expense, sometimes aboard Keating's jet. Three of the trips were made during vacations to Keating's opulent Bahamas retreat at Cat Cay. McCain did not pay Keating (in the amount of $13,433) for some of the trips until years after they were taken, after he learned that Keating was in trouble over Lincoln.<ref>[http://www.azcentral.com/news/specials/mccain/articles/0301mccainbio-chapter7.html azcentral.com]</ref><ref>{{cite news | author=Rasky, Susan | url=http://query.nytimes.com/gst/fullpage.html?res=950DE6DF1031F931A15751C1A96F948260 | title=To Senator McCain, the Savings and Loan Affair Is Now a Personal Demon | publisher=''[[The New York Times]]'' | date=1989-12-22}}</ref>

Revision as of 03:03, 17 July 2008

The Keating Five were five United States Senators accused of corruption in 1989, igniting a major political scandal as part of the larger Savings and Loan crisis of the late 1980s and early 1990s. The five senators, Alan Cranston (D-CA), Dennis DeConcini (D-AZ), John Glenn (D-OH), John McCain (R-AZ), and Donald W. Riegle (D-MI), were accused of improperly aiding Charles H. Keating, Jr., chairman of the failed Lincoln Savings and Loan Association, which was the target of an investigation by the Federal Home Loan Bank Board (FHLBB).

After a lengthy investigation, the Senate Ethics Committee determined in 1991 that Alan Cranston, Dennis DeConcini, and Donald Riegle had substantially and improperly interfered with the FHLBB in its investigation of Lincoln Savings. Senators John Glenn and John McCain were cleared of having acted improperly.

McCain was the lone Republican of the five Senators investigated, and he was included in the investigation at least partly because of his party affiliation. All five of the senators involved served out their terms. Only Glenn and McCain ran for re-election, and they were both re-elected.

Circumstances

See also: Savings and Loan crisis

The U.S. Savings and Loan crisis of the 1980s and 1990s was the failure of 747 savings and loan associations (S&Ls) in the United States. The ultimate 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.[1].

The concomitant slowdown in the finance industry and the real estate market may have been a contributing cause of the 1990-1991 economic recession. Between 1986 and 1991, the number of new homes constructed per year dropped from 1.8 million to 1 million, the lowest rate since World War II.[2]

The Keating Five scandal was prompted by the activities of one particular savings and loan: Lincoln Savings and Loan Association of Irvine, California. Lincoln's chairman was Charles Keating, who ultimately served five years in prison for his corrupt mismanagement of Lincoln.[3]

Corruption allegations

Keating had made contributions of about $1.3 million to various U.S. Senators, and he called on those Senators to help him resist regulators, when Lincoln Savings and Loan was being investigated by the Federal Home Loan Bank Board (FHLBB). Lincoln ultimately failed, sticking taxpayers with a bill for $2 billion. Asked whether his contributions had bought him influence, Keating said: “I want to say in the most forceful way I can: I certainly hope so.”[4]

When the former chairman of the FHLBB went public about the Senators' assistance to Keating, that set off a series of investigations by the California government, the United States Department of Justice, and the Senate Ethics Committee. The Ethics Committee's investigation focused on five senators: Alan Cranston (D-CA); Dennis DeConcini (D-AZ); John Glenn (D-OH); John McCain (R-AZ); and Donald W. Riegle, Jr. (D-MI), who became known as the "Keating Five". The initial charges against the five Senators were brought by Common Cause, a public interest group, and the Senate’s inquiry subsequently lasted 22 months.[5]

Peripheral role of Glenn and McCain

See also: House and Senate career of John McCain, 1982–2000

Senators McCain and Glenn were not central figures in the controversy.[6] Democrat Robert S. Bennett, who was the special investigator during the scandal, suggested to the Senate Ethics Committee that it pursue charges against neither McCain nor Glenn.[7]

McCain and Keating had become personal friends following their initial contacts in 1981.[8] Between 1982 and 1987, McCain had received $112,000 in lawful[9] political contributions from Keating and his associates.[10] In addition, McCain's wife Cindy and her father Jim Hensley had invested $359,100 in a Keating shopping center in April 1986, a year before McCain met with the regulators. McCain, his family, and their baby-sitter had made nine trips at Keating's expense, sometimes aboard Keating's jet. Three of the trips were made during vacations to Keating's opulent Bahamas retreat at Cat Cay. McCain did not pay Keating (in the amount of $13,433) for some of the trips until years after they were taken, after he learned that Keating was in trouble over Lincoln.[11][12]

By March 1987, Keating was asking McCain to travel to meet with regulators regarding Lincoln Savings; McCain refused.[8] Keating called McCain a "wimp" behind his back, and on March 24 the two had a heated, contentious meeting.[8] On April 2 and April 9, 1987, McCain and the other senators met at the Capitol with regulators, first with Edwin J. Gray, chairman of the Federal Home Loan Bank Board, and then members of the FHLBB San Francisco branch, to discuss the government's investigation of Lincoln.[8] McCain would write in 2002 that attending the two meetings was "the worst mistake of my life".[13] News of the meetings first appeared in National Thrift News in September 1987, but was only sporadically covered by the general media through April 1989.[14]

Conclusion of investigation

The Senate Ethics Committee ruled that the involvement of Glenn and McCain in the scheme was minimal, and the charges against them were dropped. In August 1991, the committee concluded that Cranston, Riegle, and DeConcini had acted improperly by interfering with the investigation by the Federal Home Loan Bank Board (FHLBB).[15]

In the end, McCain was criticized by the Senate Ethics Committee for exercising "poor judgment" when he intervened with the federal regulators on Keating's behalf,[16] but he was cleared of all charges.[17] The Senate panel's 1991 report also said that McCain's "actions were not improper nor attended with gross negligence and did not reach the level of requiring institutional action against him....Senator McCain has violated no law of the United States or specific Rule of the United States Senate."[9] On his Keating Five experience, McCain has said: "The appearance of it was wrong. 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."[16]

Cranston given the harshest penalty of all five Senators

Senator Alan Cranston of California had received more than a million dollars from Keating, had done more arm-twisting than the other Senators on Keating's behalf, and was the only Senator officially rebuked by the Senate in this matter.[17] In November of 1991, the Senate Ethics Committee voted unanimously to reprimand Cranston, instead of the more severe measure that was under consideration: censure by the full Senate. Extenuating circumstances that helped to save Cranston from censure were the fact that he was suffering from cancer, and that he had decided to not seek reelection, according to the Chairman of the Ethics Committee, Democratic Senator Howell Heflin of Alabama. The Ethics Committee took the unusual step of delivering its reprimand to Cranston during a formal session of the full Senate, with almost all 100 Senators present.[5]

Cranston was not accused of breaking any specific laws or rules, but of violating standards that Heflin said “do not permit official actions to be linked with fund-raising.” The Ethics Committee officially found that Cranston’s conduct had been “improper and repugnant”, deserving of "the fullest, strongest and most severe sanction which the committee has the authority to impose." The sanction was in these words: "the Senate Select Committee on Ethics, on behalf of and in the name of the United States Senate, does hereby strongly and severely reprimand Sen. Alan Cranston.”[5]

After the Senate reprimanded Cranston for repugnant conduct, Cranston took to the Senate floor to deny key charges against him. In response, Senator Warren Rudman of New Hampshire, the Republican Vice-Chairman of the Ethics Committee, charged that Cranston’s response to the reprimand was “arrogant, unrepentant and a smear on this institution," and that Cranston was wrong to imply that everyone does what Cranston had done. Alan Dershowitz, serving as Senator Cranston's attorney, alleged that other Senators had merely been better at “covering their tracks.”[5] Likewise, political historian Lewis Gould has written that, “the real problem for the 'Keating Three' who were most involved was that they had been caught.”[18]

Aftermath

Cranston died in January of 1993. DeConcini and Riegle continued to serve in the Senate until their terms expired, but they did not seek re-election in 1994. DeConcini was appointed by President Bill Clinton in February, 1995 to the Board of Directors of the Federal Home Loan Mortgage Corporation. [19]

Glenn did choose to run for re-election in 1992, and it was anticipated that he would have some difficulty winning a fourth term in the Senate. However, Glenn handily defeated Lieutenant Governor R. Michael DeWine for one more term in the Senate before retiring in 1999.

The scandal was followed by a number of attempts to adopt campaign finance reform—spearheaded by U.S. Sen. David Boren (D-OK)—but most attempts died in committee. A weakened reform was passed in 1993. Substantial campaign finance reform was not passed until the adoption of the McCain-Feingold Act in 2002.

After 1999, the only member of the Keating Five remaining in the U.S. Senate was John McCain, who is the Republican candidate in the 2008 U.S. presidential election. McCain survived the political scandal by, in part, becoming friendly with the political press, and in part by not letting the controversy detract from his work as a senator.[20]


Notes

  1. ^ "Financial Audit: Resolution Trust Corporation's 1995 and 1994 Financial Statements" (PDF). U.S. General Accounting Office. July 1996. {{cite news}}: Cite has empty unknown parameter: |1= (help)
  2. ^ "Housing Finance in Developed Countries An International Comparison of Efficiency, United States" (PDF). Fannie Mae. 1992.
  3. ^ Grossman, Mark. “Political corruption in America”, page 201 (2003).
  4. ^ Gehring, Verna and Galston, William. “Philosophical dimensions of public policy”, page 67 (Transaction Publishers 2003).
  5. ^ a b c d Dewar, Helen. “Cranston Accepts Reprimand; `Keating 5' Senator Angers Colleagues by Denying Misconduct”, Washington Post (1991-11-21).
  6. ^ Regens, James and Gaddie, Ronald.“The Economic Realities of Political Reform: Elections and the U.S. Senate”, page 6 (Cambridge University Press 1996).
  7. ^ Cite error: The named reference Bennett was invoked but never defined (see the help page).
  8. ^ a b c d Alexander, Man of the People, pp. 108–111.
  9. ^ a b "Excerpts of Statement By Senate Ethics Panel". The New York Times. 1991-02-28. Retrieved 2008-04-19. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  10. ^ Sullum, Jacob (2005-03-11). "How John McCain Reformed". Reason. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  11. ^ azcentral.com
  12. ^ Rasky, Susan (1989-12-22). "To Senator McCain, the Savings and Loan Affair Is Now a Personal Demon". The New York Times. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  13. ^ Worth the Fighting For, p. 161. Used to support direct quotation.
  14. ^ Worth the Fighting For, pp. 185–186. Used because it has a thorough list of media references to what would become Keating Five.
  15. ^ "The Online NewsHour: Washington Corruption Probe". PBS.org. Retrieved 2008-02-21.
  16. ^ a b Nowicki, Dan and Muller, Bill (2007-03-01). "John McCain Report: The Keating Five". The Arizona Republic. Retrieved 2007-11-23. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)CS1 maint: multiple names: authors list (link)
  17. ^ a b Salinger, Lawrence. “Encyclopedia of white-collar & corporate crime: Encyclopedia of Corporate Crime”, page 478 (Sage Publications 2004).
  18. ^ Gould, Lewis. “The Most Exclusive Club: A History of the Modern United States Senate”, page 290 (Basic Books 2005).
  19. ^ Press release about appointments to FHLMC
  20. ^ Nowicki, Dan and Muller, Bill (2007-03-01). "John McCain Report: Overcoming scandal, moving on". The Arizona Republic. Retrieved 2007-11-23. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)CS1 maint: multiple names: authors list (link)

References

  • Robert Williams, Political Scandals in the USA, Page 103, Edinburgh University Press, 1998, ISBN 1853311898
  • Robert North Roberts, Marion T. Doss, From Watergate to Whitewater: The Public Integrity War, Page 141, Greenwood Publishing Group, 1997, ISBN 0275955974
  • Jim Rutenberg, Marilyn W. Thompson, David D. Kirkpatrick and Stephen Labaton. "For McCain, Self-Confidence on Ethics Poses Its Own Risk", The New York Times, February 21, 2008. Accessed February 21, 2008.
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