Wednesday, October 22, 2008

John McCain and the Keating Five Scandal

John McCain and the “Keating Five: Scandal

By Sherman DeBrosse

It is an odd coincidence that Joe the Plumber, Samuel Joseph Wurzelbacher of Holland, Ohio, bears the last name of the son-in-law of Charles Keating, who was the central figure in the famous but largely forgotten Keating Five Scandal. Another key player was John Mc Cain. The Obama campaign produced a video onm the scandal but has pretty much left it alone. When it was mentioned, the mainstream media did not follow up by providing even sketchy details.

Banker Charles Keating, originally an Ohioan, also got into the business of befriending Arizona politicians. He gave a $55,000 campaign contribution to Bob Corbin, a former Marley employee, who ran unopposed for attorney general. He would supervise state-chartered banks. Keating got his start as a lawyer for Carl Lindner, who made great profits from the Vietnam War. One of the nation’s wealthiest men, Lindner owned 7 S &L that were to fail. By owning United Brands, he was in a position to reap profits from the government’s secret programs to fund and supply the Nicaraguan contras through Hondouras.

Keating purchased property for his office in Phoenix from a mob-connected attorney in 1980. He had a mansion in the Bahamas, where the same attorney family had a casino.
Prudential Insurance loaned him $2 million in 1985. He had numerous dealings with BCCI, which turned out to be the bank of crooks and criminals.

Keating had invested 17.5 million in TrendInvest without notifying his American Continental board. Walter Bush, cousin to the current president, was involved with Continental, which later collapsed. There were many other baffling investments. Some think he was laundering CIA money involved in its Latin American operations.

Keating had a business relationship with Hensley. Keating was good at buying political influence, and he had a ten year close relationship with John McCain, donating about $112,000 to McCain campaigns. Nine times, he paid to transport McCain’s family and babysitter to his place in the Bahamas, often on a private plane. In addition, he permitted Cindy and her father to buy into a lucrative shopping center in California. In return McCain helped him convince Ronald Reagan to deregulate the Savings and Loan industry and place a Keating friend on the board that regulated it. Deregulation was a green light for Keating to build the Phoenician, a resort, in partnership with the rulers of Kuwait. The federal government seized it in February, 1989. His bellmen were permitted to remove 24 cartons of documents.

When the Feds started investigating Keating, McCain organized the “Keating Five” senators to put pressure on the Federal Home Loan Bank board to back off. At one point McCain even demanded that the chairman of that board not participate in the investigation of Keating.

When Keating began to get into trouble and marketed $230,000,000 in bad bonds, he came up with a scheme to cover them with profits from a water scheme. He and a partner bought up a lot of water rights and then had the legislature pass a law requiring Phoenix to first buy as much water as Keating could sell before going to other vendors. They planned to pump about a million acre feet of water in a year. De Concini would also profit because he had purchased some water rights. Such a scheme could only take place in a state where the press looked the other way and the politicians were largely corrupt. The Arizona Republic and the Phoenix Gazette were owned by the family of Dan Quayle.

The Arizona House of Representatives breezed the bill through in two days, but Jerry Gilespie held up things in the Senate. He found a way to stop it dead in its tracks, but he lost his seat in the next election. No wire service reported the story but it was covered by Phoenix Magazine in 1989. This doomed Keating.

As late as May, 1988, Keating thought he had won his battle against the Federal Home Loan Bank Board. On the 20th, he threw a big party because Senators Mc Cain and De Concini, with three others, had succeeded in having the investigation of his Lincoln Savings from San Francisco to Washington. In excitement, he removed his shirt to reveal a tee shirt with a skull and bones superimposed over the letters FHLBB. He had spent a million dollars buying politicians. It looked like he had won, but he was done in when the water scheme petered out.

Keating was eventually fined 3.6 billion and sent to prison. He has been called the father of the S &L crisis. McCain was investigated by the Senate Ethics Committee and was only told he exercised “poor judgment.” Almost as soon as he saw that he had a problem, he played the role of the repentant sinner and began to create the false reputation that he was an opponent of lobbyists and the improprieties seem to flow from their involvement in public life. To convince voters that he was a different sort of politician, he started calling for campaign finance reform. Mrs. McCain retained her profitable partnership with Keating.

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