Will Keating case haunt McCain in California?
Despite polls showing he trails potential Democratic rivals by as much as 20 percentage points in this state, Republican presidential nominee John McCain says he will make an all-out California run, trying to put the state in play for the first time since 1992.
If he does, he will surely be dogged by his role in the Charles Keating affair and his testimony in the trial of the savings and loan swindler who bilked customers of the now-defunct Lincoln Savings out of more than $200 million.
Most of Keating’s victims were elderly, but many are still alive. They were systematically urged to switch money from insured savings accounts into to uninsured bonds of Keating’s Arizona-based American Continental Corp. They remember, and they are sure to be heard from if McCain runs seriously in California.
McCain says he learned from his experiences with Keating, who gave more than $112,000 to his campaigns for a House seat and one of Arizona’s slots in the U.S. Senate, and provided numerous free rides on Keating’s private jet. By his own testimony, McCain complied multiple times with Keating’s requests to lobby federal banking regulators to ease off investigating Keating’s corrupt dealings.
The Senate eventually reprimanded McCain for “poor judgment” and “questionable conduct” in backing Keating and he wrote in a memoir that “I still wince thinking about (the episode).” Afterward, he became a leading advocate of tough limits on campaign donations of all kinds. “Questions of honor…in politics…need to be addressed no less directly than we would address evidence of expressly illegal corruption,” McCain wrote.
But recent reports in the New York Times and earlier ones in the Boston Globe that McCain never denied indicate he accepted more free airplane rides from a client of a lobbyist friend during his unsuccessful 2000 run for president. Later, he wrote letters to a federal agency on behalf of that client, Paxson Communications. If McCain really did learn from the Keating affair, what was he doing on that jet?
A look at McCain’s testimony when called as a witness in Keating’s state trial also reveals a lot about what he really felt and learned.
Called to the stand on Oct. 25, 1991 in the courtroom of Superior Court Judge Lance Ito, who would later preside over the O.J. Simpson criminal trial, McCain testified that “I do…I did consider (Keating) a friend.”
He said the friendship ended when he learned that Keating had called him a “wimp” because he would attend meetings on Keating’s behalf only in Washington, D.C., but would not fly to San Francisco to meet with Western regional bank regulators.
When he next met Keating, the former prisoner of war said, “I told him I had spent some time in Vietnam not being a wimp and I resented being called one.”
McCain said that episode ended their friendship.
What’s significant here is that Keating’s well-documented crookedness was not enough to end the friendship, even though McCain attended meetings about Keating with regulators and others right up to the level of the head of the Federal Home Loan Bank Board, Ed Gray. There can be little doubt McCain knew of the Ponzi-like schemes in which Keating took money from Lincoln Savings investors and used it on Arizona real estate deals, selling new bonds in American Continental to make payments on the earlier ones.
McCain became a member of the so-called “Keating Five” when he attended a meeting in Gray’s office with fellow Sens. Alan Cranston of California, John Glenn of Ohio and Dennis DeConcini of Arizona, all Democrats. The fifth member, Democrat Donald Riegle of Michigan, missed that meeting.
Alone among those senators, McCain got cold feet, testifying that he “felt it was proper to meet with Gray, but was concerned about the appearance (created by) four senators in a room with a regulator.”
So he demurred from further involvement, spurring Keating’s “wimp” remark. One result was that while others present were censured by the Senate, McCain got only a reprimand.
How strongly might Keating’s onetime victims feel about the presidential candidacy of a man so closely linked to him?
Very, says former Los Angeles television anchorman Tom Shelley of Chatsworth, who lost $7,000 on the bonds.
“He was an apologist for Keating,” says Shelley, former spokesman for the Lincoln ACC Bondholders Action Committee. “He certainly alienated most of the Lincoln bondholders. I’m a Republican and I would have a lot of trouble voting for McCain.”
That feeling is similar to what Sam Epstein, then 81, said outside the courtroom after hearing McCain testify.
“He helped a crook, plain and simple. That man doesn’t deserve to hold any office.”
One thing for sure: If some of that sentiment receives significant attention, any hope McCain might have of making a competitive race in California will not last long. And if it gets national attention, it could also hurt him in many other states.
“-Thomas Elias writes on California issues. His email address is email@example.com
Support Local Journalism
Support Local Journalism
Readers around Lake Tahoe, Truckee, and beyond make the Sierra Sun's work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.
Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.
Your donation will help us continue to cover COVID-19 and our other vital local news.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User