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Oct 06

Should McCain Live Down the Keating Five?

October 6, 2008 • 5 Comments • Politics and Current Events

So Obama’s campaign went on the offensive and posted a video on McCain’s ties with Charles Keating of the infamous Savings and Loan scandals. Essentially, the Federal Home Loan Bank Board wanted to investigate Lincoln Savings and Loan Association for “unsound lending practices”. Five senators, all of whom had been given contributions by Lincoln Savings and Loans chairman Keating, intervened and prevented this investigation. One of these senators was John McCain.

What preempted this? Lincoln Savings had invested very conservatively until Keating took charge. He fired existing management, then took company assets from $1.1 billion to $5.5 billion making risky investments that eventually tipped regulators off. It was too late, and Lincoln Savings and Loan Association then collapsed in 1989, costing tax payers $2 billion. It also cost 21,00 investors, mostly elderly, to lose their savings. Three out of the five Senators involved lost their political careers and McCain was chastised for executing “poor judgment”.

We are guaranteed life, liberty and the pursuit of happiness, which was basically ripped off of John Locke’s term “life, liberty and the pursuit of property”. So here are some questions for you:
1.) Would this government interference protect our “pursuit of property”, since it was aimed at preventing direct lending as well as the sale of high-risk junk bonds?
2.) How much does the S&L scandal of the 1980s resemble the one going on now (deregulation leading to overzealous and unscrupulous lending)?
3.) Are these just natural cycles? What would it take for us prevent this from happening? How accountable are people like Keating? How accountable was McCain?
4.) Will people trust banks if those involved in today’s housing scandal are not properly implicated?

Would appreciate any feedback.

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5 Comments
  • http://RobyFitzhenry.com Roby Fitzhenry

    He definitely should be called out on the Keating case. The bailout plan is a socialist move, regardless of if it saved our economy. Hell in a hand basket my dear. :)

    Roby Fitzhenrys last blog post..What are we doing?

  • http://dayngrzone.blogspot.com Dayngr

    Is this really any different than Obama’s relationship with Bill Ayers, Rev. White and/or Antoin Rezko?

    Regarding McCain you mention: Three out of the five Senators involved lost their political careers …”
     That means two others didn’t.

    If the folks who investigated this only found that McCain executed “poor judgment” in his associations with these folks, then I think we should move on.

    The bottom line is that people come in contact with and do business with thousands or hundreds of thousands of people over a lifetime. We can’t possibly know everything about everyone we do business with.

    I think how people handle these relationships once they find out their affiliates are not who they think they are is much more important. But that’s just me.

    Dayngrs last blog post..Chats with a 4 Year Old

  • http://dayngrzone.blogspot.com Dayngr

    … make that Wright … geez I need more coffee!

    Dayngrs last blog post..Chats with a 4 Year Old

  • http://michellesblog.net Michelle

    Dangyr, this cost the American tax payer 2 billion dollars. 21,000 people lost their life savings because nothing was done to prevent Keating from mismanaging their money. McCain wasn’t just associated with Keating, he directly interfered with a move to help them because Keating was his friend and campaign contributor.

    2 BILLION DOLLARS.

    If my life savings was a direct casualty of greedy morons and the idiot politicians who protect them, you’re damn right I wouldn’t move on. This isn’t a matter of harmless associations. McCain made a proactive move to protect Keating, at the expense of the American people. How does this make him a “maverick”?

    I’m sorry, if anyone is a maverick, it is Ron Paul. If he advocated volunteerism and focused on pragmatic steps instead of ideology, I would have voted for him.

  • Martin AKA bangoul

    “We are guaranteed life, liberty and the pursuit of happiness”

    Firstly, I don’t agree with that statement (or the similar one in the declaration of independence that states that we are “endowed with unalienable rights”). We aren’t guaranteed these things, we are granted them as civil rights. If we wish to uphold this ideal and the freedoms to which it supplies. We need only to demand a civil system that ensures the protection (or rather the continual granting) of these rights. Having said that:

    1.) Would this government interference protect our “pursuit of property”, since it was aimed at preventing direct lending as well as the sale of high-risk junk bonds?

    This “government interference” is aimed at protecting the system which ultimately led to the current problem we are experiencing and which did little to protect the “right to the pursuit of property” that you described. How can we then hope for different results from the same system?

    2.) How much does the S&L scandal of the 1980s resemble the one going on now (deregulation leading to overzealous and unscrupulous lending)?

    It does resemble it in the way you described, but more importantly it resembles it based on the fact that we again see the failure of this system- the symptoms are different, but the underlying causes are the same. Namely that we currently have an economic system who’s worth is not tied to any physical asset or commodity, but rather is controlled solely by the need for money itself (i.e. money is created when a loan agreement is signed).

    A system such as this can expand and contract independent of any physical (economic or social) variables and is thus, by definition, not self-sufficient.

    The fact that these failures are occurring in increased frequency should be cause for concern. Especially when one considers that in a time where the economy is bad and the masses lose money and property of worth- that wealth is concentrated and transferred to a few individuals- further eroding the granting of those rights (in equality) to the population.

    3.) Are these just natural cycles? What would it take for us prevent this from happening? How accountable are people like Keating? How accountable was McCain?

    This question is interesting because the properties of any man-made system (good or bad) cannot be described as “natural” because that system itself cannot be “natural”. These cycles are direct consequences of the design of the system. In order to change them we must make a change to the system. What are the characteristics of this new system? That is the question to which we must strive to answer.

    People such as Keating are as accountable as the law allows. For too many years we have assumed (not without cause) that the “moral” contract of individuals in a society is apparent and does not need to be articulated by any law. This is a dangerous assumption, men like Keating are using the system to their personal advantage within (sometimes) the letter of the law. If we think (as a society) that business should function for the greater benefit of the people, then we should make that belief into an explicit law. To do that would be to fundamentally change capitalism towards a more socialist system, as this ideal is contrary to capitalism’s intent. But we’ve also seen the supreme failures of socialism…

    How accountable was McCain?

    How much are you willing to trust him? He claims accountability (who doesn’t), he does have some actions that show that he is serious about it, but not enough (and this is just my personal opinion) to warrant me saying that I trust him.

    4.) Will people trust banks if those involved in today’s housing scandal are not properly implicated?

    Welcome to the system of economic slavery. People don’t have a choice but to trust banks. Most people’s entire life, is based on debt. The definition of freedom always seems to get corrupted by society, and in this society, people associate freedom with financial capability:

    “I am free to obtain all the things financially possible for me. The more I can attain, the more I become free”.

    Very few can demand reform of the banking industry when the banking industry has them captive (even if only in perception).