Monday, October 06, 2008

KEATING ECONOMICS: John McCain & The Making of a Financial Crisis

History Repeats Itself: the question is whether we're smart enough to notice.
  • In an economic crisis,
  • Financial institutions that made big money from insanely risky loans
  • Now have big problems because (after all) those loans were insanely risky,
  • Seek help in the form of taxpayer dollars, so they
  • Offer to help John "I Am A De-Regulator" McCain with an election campaign, and
  • He helps them ... and then denies it.
"The current economic crisis demands that we understand John McCain's attitudes about economic oversight and corporate influence in federal regulation.

Nothing illustrates the danger of his approach more clearly than his central role in the savings and loan scandal of the late '80s and early '90s. John McCain was accused of improperly aiding his political patron, Charles Keating, chairman of the Lincoln Savings and Loan Association. The bipartisan Senate Ethics Committee launched investigations and formally reprimanded Senator McCain for his role in the scandal -- the first such Senator to receive a major party nomination for president.

At the heart of the scandal was Keating's Lincoln Savings and Loan Association, which took advantage of deregulation in the 1980s to make risky investments with its depositors' money. McCain intervened on behalf of Charles Keating with federal regulators tasked with preventing banking fraud, and championed legislation to delay regulation of the savings and loan industry -- actions that allowed Keating to continue his fraud at an incredible cost to taxpayers.

When the savings and loan industry collapsed, Keating's failed company put taxpayers on the hook for $3.4 billion and more than 20,000 Americans lost their savings. John McCain was reprimanded by the bipartisan Senate Ethics Committee, but the ultimate cost of the crisis to American taxpayers reached more than $120 billion.

The Keating scandal is eerily similar to today's credit crisis, where a lack of regulation and cozy relationships between the financial industry and Congress has allowed banks to make risky loans and profit by bending the rules. And in both cases, John McCain's judgment and values have placed him on the wrong side of history."

Learn more at

Fact Check Confirms The Video

"The Verdict: True. McCain did push to delay regulations that would have cracked down on savings-and-loans practices and intervened on Keating's behalf, although he was cleared of wrongdoing in the "Keating Five" case."

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