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.