| Revision as of 07:01, 6 October 2008 editMarsRover (talk | contribs)Extended confirmed users6,248 edits If this documentary is notable then put in the John McCain article since this article is about all 5 people. Putting it in the intro with some misleading words that Obama mentioned it is promotional.← Previous edit | Revision as of 07:06, 6 October 2008 edit undoRet.Prof (talk | contribs)Extended confirmed users, Pending changes reviewers15,357 edits ←Redirected page to The Keating Five ScandalNext edit → | ||
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| Image:AlanCranston.jpg|<center>] (D-CA)</center> | |||
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| Image:Glenn.gif|<center>] (D-OH)</center> | |||
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| Image:Don Riegle, Jr.jpg|<center>] (D-MI)</center> | |||
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| The '''Keating Five''' were five ]s accused of corruption in 1989, igniting a major ] as part of the larger ] of the late 1980s and early 1990s. The five senators, ] (]-]), ] (]-]), ] (]-]), ] (]-]), and ] (]-]), were accused of improperly aiding ], chairman of the failed ], which was the target of an investigation by the ] (FHLBB). | |||
| The result of the collapse of Lincoln Savings and Loan was that 21,000 mostly elderly investors lost their life savings. After a lengthy investigation, the ] determined in 1991 that Alan Cranston, Dennis DeConcini, and Donald Riegle had substantially and improperly interfered with the FHLBB in its investigation of Lincoln Savings. Senators John Glenn and John McCain were cleared of having acted improperly but were criticized for having exercised "poor judgment". | |||
| All five of the senators involved served out their ]. | |||
| Only Glenn and McCain ran for re-election, and they were both re-elected. | |||
| ==Circumstances== | |||
| {{Seealso|Savings and Loan crisis}} | |||
| The U.S. Savings and Loan crisis of the 1980s and early 1990s was the failure of 747 ]s (S&Ls) in the United States. The ultimate cost of the crisis is estimated to have totaled around $160.1 billion, about $124.6 billion of which was directly paid for by the U.S. taxpayer.<ref>{{cite news | title= Financial Audit: Resolution Trust Corporation's 1995 and 1994 Financial Statements | | |||
| url=http://www.gao.gov/archive/1996/ai96123.pdf | format=PDF| date=July 1996 | | |||
| |publisher = U.S. General Accounting Office}}</ref> | |||
| The accompanying slowdown in the finance industry and the real estate market may have been a contributing cause of the 1990-1991 economic ]. Between 1986 and 1991, the number of new homes constructed per year dropped from 1.8 million to 1 million, the lowest rate since World War II.<ref>{{cite news |title= Housing Finance in Developed Countries An International Comparison of Efficiency, United States|url=http://www.fanniemaefoundation.org/programs/jhr/pdf/jhr_0301_ch6_USA.pdf | format=PDF |date=1992 |publisher= Fannie Mae}}</ref> | |||
| The Keating Five scandal was prompted by the activities of one particular savings and loan: ] of ]. Lincoln's chairman was ], who ultimately served five years in prison for his corrupt mismanagement of Lincoln.<ref>Grossman, Mark. , page 201 (2003).</ref> In the four years since Keating's ] (ACC) had purchased Lincoln in 1984, Lincoln's assets had increased from $1.1 billion to $5.5 billion.<ref name="nyt-who">{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=950DE4D91230F931A15752C1A96F948260 | title=The Lincoln Savings and Loan Investigation: Who Is Involved | publisher='']'' | date=1989-11-22}}</ref> | |||
| Such savings and loan associations had been deregulated in the early 1980s, allowing them to make highly risky investments with their depositors' money, a change of which Keating and other savings and loan operators took advantage.<ref name="nyt-who"/><ref name="gould">{{cite book | last=Gould | first=Lewis J. | title=The Most Exclusive Club: A History of the Modern United States Senate | publisher=] | year=2005 | isbn=0-465-02778-4}} pp. 289–290.</ref> Savings and loans established connections to many members of Congress, by supplying them with needed funds for campaigns through legal donations.<ref name="gould"/> Lincoln's particular investments took the form of buying land, taking equity positions in real estate development projects, and buying high-yield ].<ref name="nyt070989">{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=950DE1D91138F93AA35754C0A96F948260 | title= Showdown Time for Danny Wall | author=Nathaniel C. Nash | publisher='']'' | date=1989-07-09}}</ref> | |||
| ==Corruption allegations== | |||
| The core allegation of the Keating Five affair is that Keating had made contributions of about $1.3 million to various U.S. Senators, and he called on those Senators to help him resist regulators. The regulators backed off, to later disastrous consequences. | |||
| Beginning in 1985, ], chair of the ] (FHLBB), feared that the savings industry's risky investment practices were exposing the government's insurance funds to huge losses.<ref name="nyt070989"/> Gray instituted a rule whereby savings associations could hold no more than ten percent of their assets in "direct investments",<ref name="nyt070989"/> and were thus prohibited from taking ownership positions in certain financial entities and instruments.<ref name="az-keating"/> Lincoln had become burdened with bad debt resulting from its past aggressiveness, and by early 1986,<ref name="nyt070989"/> its investment practices were being investigated and audited by the FHLBB:<ref name="ohio-glenn"/> in particular, whether it had violated these direct investment rules; Lincoln had directed ]-insured accounts into commercial real estate ventures.<ref name="nyt-who"/> | |||
| By the end of 1986, the FHLBB had found that Lincoln had $135 million in unreported losses and had surpassed the regulated direct investments limit by $600 million.<ref name="nyt070989"/> | |||
| Keating had earlier taken several measures to oppose Gray and the FHLBB, including recruiting a study from then-private economist ] saying that direct investments were not harmful,<ref name="nyt070989"/> and getting President ] to make a recess appointment of a Keating ally, Atlanta real estate developer Lee H. Henkel Jr., to an open seat on the FHLBB.<ref name="nyt070989"/> But by March 1987, Henkel had resigned, upon news of his having large loans due to Lincoln.<ref name="nyt070989"/> Meanwhile, the Senate had changed control from Republican to Democratic during the ], placing several Democratic senators in key positions, and starting in January 1987, Keating's staff was putting pressure on Cranston to remove Gray from any FHLBB discussion regarding Lincoln.<ref name="trust-275">{{cite book | last=Binstein | first=Michael | coauthors=Bowden, Charles | title=Trust Me: Charles Keating and the Missing Billions | publisher=] | year=1993 | isbn=0-679-41699-4}} p. 275.</ref> The following month, Keating began large-scale contributions into Cranston's project to increase California voter registration.<ref name="trust-275"/> In February 1987, Keating met with Riegle and began contributing to Riegle's 1988 re-election campaign.<ref name="trust-279">Binstein and Bowden, ''Trust Me'', pp. 278–279.</ref> | |||
| It appeared as though the government might seize Lincoln for being insolvent.<ref name="az-keating"/> The investigation was, however, taking a long time.<ref name="ohio-glenn"/> Keating was asking that Lincoln be given a lenient judgment by the FHLBB, so that it could limit its high risk investments and get into the safe (at the time) ] business, thus allowing the business to survive. A letter from audit firm ] bolstered Keating's case that the government investigation was taking a long time.<ref name="alex-k5-1"/> Keating now wanted the five senators to intervene with the FHLBB on his behalf. | |||
| By March 1987, Riegle was telling Gray that "Some senators out west are very concerned about the way the bank board is regulating Lincoln Savings," adding somewhat ominously, "I think you need to meet with the senators. You'll be getting a call."<ref name="trust-279"/> Keating and DeConcini were asking McCain to travel to San Francisco to meet with regulators regarding Lincoln Savings; McCain refused.<ref name="alex-k5-1">{{cite book |title = Man of the People: The Life of John McCain |first = Paul |last = Alexander |authorlink=Paul Alexander |isbn = 0-471-22829-X |year = 2002 |publisher = ]|location=Hoboken, New Jersey}} pp. 108–111.</ref><ref name="az-keating"/> DeConcini told Keating that McCain was nervous about interfering.<ref name="az-keating"/> Keating called McCain a "wimp" behind his back, and on March 24, Keating and McCain had a heated, contentious meeting.<ref name="alex-k5-1"/> | |||
| On April 2, 1987, a meeting with chairman Gray of the FHLBB was held in DeConcini's Capitol office, with Senators Cranston, Glenn, and McCain also in attendance.<ref name="az-keating"/> The senators requested that no staff be present.<ref name="Seidman">{{cite book | last=Seidman | first=L. William | authorlink=L. William Seidman | title=Full Faith and Credit: The Great S & L Debacle and Other Washington Sagas | publisher=] | year=1993 | isbn=0-8129-2134-8}} pp. 233, 235.</ref> DeConcini started the meeting with a mention of "our friend at Lincoln."<ref name="az-keating"/> Gray told the assembled senators that he did not know the particular details of the status of Lincoln Savings and Loan, and that the senators would have to go to the bank regulators in San Francisco that had oversight jurisdiction for the bank. Gray did offer to set up a meeting between those regulators and the senators.<ref name="az-keating"/> | |||
| On April 9, 1987, a two-hour meeting<ref name="nyt-who"/> with three members of the FHLBB San Francisco branch was held, again in DeConcini's office, to discuss the government's investigation of Lincoln.<ref name="alex-k5-1"/><ref name="az-keating"/> Present were Cranston, DeConcini, Glenn, McCain, and additionally Riegle.<ref name="az-keating"/> The regulators felt that the meeting was very unusual and that they were being pressured by a united front, as the senators presented their reasons for having the meeting.<ref name="az-keating"/> DeConcini began the meeting by saying, "We wanted to meet with you because we have determined that potential actions of yours could injure a constituent."<ref name="inside">{{cite book | last=Pizzo | first=Stephen | coauthors=Mary Fricker, Paul Muolo | title=Inside Job: The Looting of America's Savings and Loans | publisher=] | year=1989 | isbn=0-07-050230-7}} pp. 291, 294–296.</ref> McCain said, "One of our jobs as elected officials is to help constituents in a proper fashion. ACC is a big employer and important to the local economy. I wouldn't want any special favors for them.... I don't want any part of our conversation to be improper." Glenn said, "To be blunt, you should charge them or get off their backs," while DeConcini said, "What's wrong with this if they're willing to clean up their act? ... It's very unusual for us to have a company that could be put out of business by its regulators."<ref name="az-keating"/> The regulators then revealed that Lincoln was under criminal investigation on a variety of serious charges, at which point McCain severed all relations with Keating.<ref name="az-keating"/> Glenn continued to help Keating after that revelation, by setting up a meeting with then-House Majority Leader ], which turned out to be the only questionable thing Glenn did throughout the whole affair.<ref name="Karaagac" /> | |||
| The San Francisco regulators finished their report in May 1987 and recommended that Lincoln be seized by the government due to unsound lending practices.<ref name="az-keating"/><ref name="nyt-who"/> Gray, whose time as chair was about to expire, deferred action on the report, saying that his adversarial relationship with Keating would make any action he took seem vindictive, and that instead the incoming chair should take over the decision.<ref name="nyt070989"/> Meanwhile Keating filed a lawsuit against the FHLBB, saying it had leaked confidential information about Lincoln.<ref name="nyt070989"/> The new FHLBB chair was ], who was more sympathetic to Keating and took no action on the report, saying its evidence was insufficient.<ref name="nyt-who"/><ref name="az-keating"/> In September 1987, the Lincoln investigation was removed from the San Francisco group and in May 1988, a new audit of Lincoln began in Washington.<ref name="az-keating"/> | |||
| News of the April meetings between the senators and the FHLBB officials first appeared in '']'' in September 1987, but was only sporadically covered by the general media for the next year and a half.<ref name="wtff-185">{{cite book | last=McCain | first=John | authorlink=John McCain | coauthors =] | title=] | publisher=] | year=2002 |location=New York | isbn=0-375-50542-3}} pp. 185–186. Used because it has a thorough list of media references to what would become Keating Five.</ref> In early 1988, '']'' ran a story on Riegle's participation,<ref name="kurtz">{{cite book | last=Kurtz | first=Howard | authorlink=Howard Kurtz | title=Media Circus: The Trouble with America's Newspapers | publisher=] | year=1994 | format=paperback |isbn=0-8129-6356-3}} pp. 69–72.</ref> which Riegle responded to on '']'' by denying an interceding on Lincoln's behalf,<ref name="inside"/> before returning Keating's campaign contributions back to him.<ref name="kurtz"/> In spring 1988, the '']'' ran a short piece in their business section, but their political reporters did not follow up on it; two isolated, inside page mentions by '']'' and '']'' similarly failed to develop further.<ref name="kurtz"/> As media critic ] would later write, "the saga of Charles Keating took years to penetrate the national consciousness."<ref name="kurtz"/> | |||
| ==Failure of Lincoln and investigation of the senators== | |||
| Lincoln stayed in business; from mid-1987 to April 1989, its assets grew from $3.91 billion to $5.46 billion.<ref name="nyt070989"/> During this time, the parent American Continental Corporation was desperate for cash inflow to make up for losses in real estate purchases and projects.<ref name="nyt113089">{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=950DE1D81131F933A05752C1A96F948260 | title= Collapse of Lincoln Savings Leaves Scars for Rich, Poor and the Faithful | author=Nathaniel C. Nash | publisher='']'' | date=1989-11-30}}</ref> Lincoln's branch managers and tellers convinced customers to replace their federally-insured ] with higher-yielding bond certificates of American Continental; the customers later said they were never properly informed that the bonds were uninsured and very risky given the state of American Continental's finances.<ref name="nyt113089"/> Indeed the regulators had already adjudged the bonds to have no solvent backing.<ref name="Seidman"/> ] chair ] would later write that Lincoln push to get depositors to switch was "one of the most heartless and cruel frauds in modern memory."<ref name="Seidman"/> | |||
| American Continental went bankrupt in April 1989, and Lincoln was seized by the FHLBB on April 14, 1989.<ref name="nyt-who"/> More than 21,000 mostly elderly investors lost their life savings. This total came to about $285 million.{{Fact|date=August 2008}} The federal government was liable for $2 billion to cover Lincoln's losses when it seized the institution.<ref name="nyt113089"/> | |||
| Keating was hit with a $1.1 billion fraud and racketeering action, filed against him by the regulators.<ref name="nyt-who"/> In talking to reporters in April, Keating said, "One question, among many raised in recent weeks, had to do with whether my financial support in any way influenced several political figures to take up my cause. I want to say in the most forceful way I can: I certainly hope so."<ref>{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=950DE6DB143AF93AA35752C1A96F948260 | title=A Man of Influence: Political Cash and Regulation: A Special Report: In Savings Debacle, Many Fingers Point Here | author=Nash, Nathaniel C. and Shenon, Philip | publisher='']'' | date=1989-11-09}}</ref> | |||
| In the wake of the Lincoln failure, press attention to the senators began to pick up, with a July 1989 '']'' article about Cranston's role.<ref name="kurtz"/> With a couple of months, '']'' and '']'' reporters were investigating McCain's personal relationships with Keating.<ref name="kurtz"/> | |||
| On September 25, 1989, several Republicans from Ohio filed an ethics complaint against Glenn, charging that he had improperly intervened on Keating's behalf.<ref name="roberts">Robert North Roberts, Marion T. Doss, ''From Watergate to Whitewater: The Public Integrity War'', ], 1997, ISBN 0275955974. pp. 140–141.</ref><ref name="Bennett"/> The initial charges against the five Senators were made on October 13, 1989 by ], a public interest group, who asked for the ] and the ] to investigate the actions of the senators relative to Lincoln and the contributions received from Keating and whether they violated the rules of the Senate or federal election laws.<ref name="wapo020891">{{cite news | url=http://www.washingtonpost.com/wp-dyn/content/article/2008/08/18/AR2008081800698_pf.html | title=Panel Finds 'Credible Evidence' Cranston Violated Ethics Rules | author=Dewar, Helen | publisher='']'' | date=1991-02-08}}</ref><ref name="Dewar"/><ref>{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=950DE6DC1731F934A15753C1A96F948260 | title= Savings and Loan Executives Accused of Tapping Phones | author=Berke, Richard L. | publisher='']'' | date=1989-10-27}}</ref><ref name="Bennett"/> But the most public attention came from the ], whose new chair ] held 50 hours of hearings into the Lincoln failure and associated events.<ref name="kurtz"/> | |||
| By November 1989, the estimated cost of the overall savings and loan crisis had reached $500 billion, and the media's formerly erratic coverage had turned around and become a ].<ref name="kurtz"/><ref name="Mitchell" /> The Lincoln matter was getting large-scale press attention and the senators became commonly known as the "Keating Five".<!-- keep a lookout for earlier usages, but Nov 89 is the first I see in the NYT, WaPo, and Time archives--><ref name="nyt110589">{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=950DE4DF143BF936A35752C1A96F948260 | title=Helping Constituents or Themselves? | author=Berke, Richard L. | publisher='']'' | date=1989-11-05}}</ref><ref>{{cite news | url=http://www.time.com/time/magazine/article/0,9171,959094,00.html | title='A Legal Bank Robbery' | author=] | publisher='']'' | date=1989-11-27}}</ref> All the senators denied they had done anything improper in the matter, and said Keating's contributions made no difference to their actions.<ref name="roberts"/> The senators' initial defense of their actions rested on Keating being one of their constituents; McCain said, "I have done this kind of thing many, many times," and said the Lincoln case was like "helping the little lady who didn't get her Social Security."<ref name="nyt110589"/> Some of the five hired high-power Washington lawyers to represent them – including ] for Glenn and ] for McCain – while others feared that to do so would give the appearance their political careers were in jeopardy.<ref>{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=950DE0D71E3EF931A15752C1A96F948260 | title=5 Senators Struggle to Avoid Keating Inquiry Fallout | author=Shenon, Philip | publisher='']'' | date=1989-11-22 | accessdate=2008-10-05}}</ref><ref>McCain, ''Worth the Fighting For'', p. 195. Used to specify McCain's attorney.</ref> | |||
| The Justice Department and the ] began by investigation possible criminal actions by Keating, but then expanded its inquiries to include the five senators.<ref>{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=950DE2D9173AF930A25752C1A96F948260 | title= Savings Official's Ties In Senate Investigated | author=Nash, Nathaniel C. | publisher='']'' | date=1989-11-13}}</ref> The FBI soon focused their attention on Cranston, because the largest sums of money from Keating came in to Cranston-involved voter-registration drives whose tax-exempt status might have been violated.<ref>{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=950DE5D8103CF935A35751C1A96F948260 | title=Cranston Inquiry Widens to Include Signups of Voters | author=Berke, Richard L. | publisher='']'' | date=1989-12-06}}</ref> | |||
| ==Relationships of senators to Keating== | |||
| Much of the press attention to the Keating Five focused on the relationships of each of the senators to Keating. | |||
| Cranston had received $39,000 from Keating and his associates for his 1986 Senate re-election campaign.<ref name="nyt-who"/> Furthermore, Keating had donated some $850,000 to assorted groups founded by Cranston or controlled by him, and another $85,000 to the ].<ref name="nyt-who"/> Cranston considered Keating a constituent because Lincoln was based in California.<ref name="nyt110589"/> | |||
| DeConcini had received about $48,000 from Keating and his associates for his 1988 Senate re-election campaign.<ref name="nyt-who"/> In September 1989, DeConcini stated he would return the money.<ref name="nyt-who"/> DeConcini considered Keating a constituent because Keating lived in Arizona; they were also long-time friends.<ref name="nyt110589"/> | |||
| Glenn had received $34,000 in direct contributions from Keating and his associates for his 1984 presidential nomination campaign, and a ] tied to Glenn had received an additional $200,000.<ref name="nyt-who"/> Glenn considered Keating a constituent because one of Keating's other business concerns was headquartered in Ohio.<ref name="nyt110589"/> | |||
| According to the ], "McCain was the only one of the five senators with close personal ties to Keating."<ref>{{cite news | url=http://pqasb.pqarchiver.com/latimes/access/60990907.html?dids=60990907:60990907&FMT=ABS&FMTS=ABS:FT&date=Jan+05%2C+1991&author=ROBERT+A.+ROSENBLATT%3B+SARA+FRITZ&pub=Los+Angeles+Times+(pre-1997+Fulltext)&desc=McCain+Probed+Over+Traveling+to+Keating+Spa+Thrifts%3A+The+senator+becomes+testy+when+asked+to+explain+a+three-year+delay+in+repaying+%2413%2C000+in+costs+to+Lincoln+S%26L+for+trips+to+the+Bahamas.&pqatl=google | title=McCain Probed Over Traveling to Keating Spa Thrifts | publisher=] |date= Jan 5, 1991 | first= | last= | accessdate =2008-09-31}}</ref> McCain and Keating had become personal friends following their initial contacts in 1981,<ref name="alex-k5-1"/> and McCain was the closest socially to Keating of the five senators.<ref>{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=9D0CE1D91F3CF936A35752C0A967958260 | title= 2 Senators Deny Impropriety In Dealings With Keating | author=Berke, Richard L. | publisher='']'' | date=1991-01-05}}</ref> Like DeConcini, McCain considered Keating a constituent as he lived in Arizona.<ref name="nyt110589"/> Between 1982 and 1987, McCain had received $112,000 in political contributions from Keating and his associates.<ref>{{cite news | url=http://www.reason.com/news/show/35983.html | title=How John McCain Reformed | author=] | publisher='']'' | date=2005-03-11}}</ref> In addition, McCain's wife ] and her father ] had invested $359,100 in a Keating shopping center in April 1986, a year before McCain met with the regulators. McCain, his family, and their baby-sitter had made nine trips at Keating's expense, sometimes aboard Keating's jet. Three of the trips were made during vacations to Keating's opulent ] retreat at ]. McCain did not pay Keating (in the amount of $13,433) for some of the trips until years after they were taken, when he learned that Keating was in trouble over Lincoln.<ref name="az-keating"/><ref>{{cite news | author=Rasky, Susan | url=http://query.nytimes.com/gst/fullpage.html?res=950DE6DF1031F931A15751C1A96F948260 | title=To Senator McCain, the Savings and Loan Affair Is Now a Personal Demon | publisher='']'' | date=1989-12-22}}</ref> Because of these connections, ] in 1989 stated McCain was the "most reprehensible" of the five<ref>{{cite news | url=http://www.phoenixnewtimes.com/1989-11-29/news/mccain-the-most-reprehensible-of-the-keating-five/1 | title=McCain: The Most Reprehensible of the Keating Five | publisher=] |date= November 29, 1989 | first= | last= | accessdate =2008-09-31}}</ref> and had financial connections that the other Senators did not have to Keating.<ref>{{cite news | url=http://www.highbeam.com/doc/1P2-1216752.html?refid=gg_x_02 | title=McCain Repays Keating Firm for Trips; 9 Flights Linked to S&L | publisher=] |date= Oct 12, 1989 | first= | last= | accessdate =2008-09-31}}</ref> | |||
| Riegle had received some $76,000 from Keating and his associates for his 1988 Senate re-election campaign.<ref name="nyt-who"/> Riegle later announced in April 1988 he was returning the money.<ref name="nyt070989"/> Riegle's constituency connection to Keating was that Keating's ] was located in Michigan.<ref name="nyt110589"/> | |||
| ==Senate Ethics Committee investigation and findings== | |||
| ===History=== | |||
| The ]'s investigation began on November 17, 1989.<ref name="wtff-194"/> It focused on all five senators and lasted 22 months,<ref name="Dewar">Dewar, Helen. , ''Washington Post'' (]).</ref> with 9 months of active investigation and 7 weeks of hearings.<ref name="williams-103">Robert Williams, ''Political Scandals in the USA'', ], 1998, ISBN 1853311898. p. 103.</ref> The committee was composed of three Democratic senators, ] (chair), ], and ], and three Republican senators, ] (vice chair), ], and ].<ref name="wtff-194">McCain, ''Worth the Fighting For'', pp. 194–195. Used to give committee composition.</ref> Washington attorney ] was appointed as special outside counsel to the committee, tasked with conducting the investigation.<ref name="wtff-194"/> | |||
| Initially the committee investigated in private. On September 10, 1990, Bennett submitted a confidential report, which soon leaked, that recommended that the committee continue its investigation of Cranston, DeConcini, and Riegle, but take no action against Glenn and McCain,<ref name="wapo020891"/> as there was insufficient evidence to pursue the latter two.<ref name="nyt092990">{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=9C0CE4DA133EF93AA1575AC0A966958260 | title= Ethics Committee is Urged to Clear 2 of 5 in Savings Inquiry | author=Berke, Richard L. | publisher='']'' | date=1990-09-29}}</ref> Bennett also recommended that public hearings be held.<ref name="Bennett"/> | |||
| Speculation that this would be the decision had already taken place, and both Glenn and McCain were frustrated that the long delay in resolving their cases was damaging their reputations.<ref name="nyt092990"/> However, there were political implications, as the removal of the two would eliminate the only Republican from the case.<ref name="nyt092990"/> The committee's work was further made difficult by there being no specific rule that governed the propriety of members intervening with federal regulators.<ref name="nyt092990"/> By mid-October, several Republican senators, including former Ethics Committee chair ], were taking the unusual step of publicly complaining about the Ethics Committee's inaction, saying that it was unfair to Glenn and McCain, that the whole lengthy process was unfair to all five, and that political motives might be behind the delays.<ref>{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=9C0CEFD81E3DF936A25753C1A966958260 | title= G.O.P. Senators See Politics In Pace of Keating 5 Inquiry | author=Berke, Richard L. | publisher='']'' | date=1990-10-15}}</ref> Eventually, the committee could not agree on the Bennett recommendation regarding Glenn and McCain:<ref name="wapo020891"/> vice chair Rudman agreed with Bennett, chair Heflin did not.<ref name="Karaagac" /> On October 23, 1990, the committee decided to keep all five senators in the case, and scheduled public hearings to question them and other witnesses.<ref name="wapo020891"/><ref name="Bennett"/> | |||
| These hearings would take place from November 15 through January 16, 1991.<ref name="wapo020891"/> They were held in the ]'s largest hearing room.<ref name="wtff-199">McCain, ''Worth the Fighting For'', p. 199. Used to give atmosphere of hearings.</ref> They were broadcast live in their entirety by ], with ] and the network news programs showing segments of the testimonies.<ref name="wtff-199"/> Overall, McCain would later write, "The hearings were a public humiliation."<ref name="wtff-199"/> | |||
| The committee reported on the other four senators in February 1991, but delayed its final report on Cranston until November 1991.<ref name="williams-103"/> During that period there was partisan-aligned disagreement within the committee over how to treat Cranston, and in August 1991 a special counsel's report was released by Helms.<ref name="nyt080591">{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=9D0CE4DA113AF936A3575BC0A967958260 | title=Cranston Censure Urged by Counsel | author=Berke, Richard L. | publisher='']'' | date=1991-08-05}}</ref> A delay was also caused when Pryor suffered a heart attack in April 1991, and was replaced on the committee by ].<ref name="nyt082291">{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=9D0CE7DD1538F931A1575BC0A967958260 | title= Senator Pryor Returns to Ethics Committee | publisher='']'' | date=1991-08-22}}</ref> Bingaman spent months learning the complex materials involved in the matter, only to resign in July due to a conflict of interest.<ref name="nyt082291"/> Pryor was reassigned to the committee in August 1991, so as to not further delay its deliberations.<ref name="nyt082291"/> | |||
| The various committee reports addressed each of the five senators. | |||
| ===Cranston: reprimanded=== | |||
| The Senate Ethics Committee ruled that Cranston had acted improperly by interfering with the investigation by the FHLBB.<ref name="PBS">{{cite web | |||
| | title = The Online NewsHour: Washington Corruption Probe | |||
| | work = PBS.org | |||
| | url = http://www.pbs.org/newshour/indepth_coverage/law/corruption/history.html | |||
| | accessdate = 2008-02-21 }}</ref> | |||
| He had received more than a million dollars from Keating, had done more arm-twisting than the other Senators on Keating's behalf, and was the only Senator officially rebuked by the Senate in this matter.<ref name="Salinger" /> | |||
| Cranston was given the harshest penalty of all five Senators. | |||
| In November of 1991, the ] voted unanimously to reprimand Cranston, instead of the more severe measure that was under consideration: ] by the full Senate. Extenuating circumstances that helped to save Cranston from censure were the fact that he was suffering from cancer, and that he had decided to not seek reelection, according to chair Heflin. The Ethics Committee took the unusual step of delivering its reprimand to Cranston during a formal session of the full Senate, with almost all 100 Senators present.<ref name="Dewar" /> | |||
| Cranston was not accused of breaking any specific laws or rules, but of violating standards that Heflin said “do not permit official actions to be linked with fund-raising.” The Ethics Committee officially found that Cranston’s conduct had been “improper and repugnant”, deserving of "the fullest, strongest and most severe sanction which the committee has the authority to impose." The sanction was in these words: "the Senate Select Committee on Ethics, on behalf of and in the name of the United States Senate, does hereby strongly and severely reprimand Sen. Alan Cranston.”<ref name="Dewar" /> | |||
| After the Senate reprimanded Cranston, he took to the Senate floor to deny key charges against him. In response, vice-chair Rudman charged that Cranston’s response to the reprimand was “arrogant, unrepentant and a smear on this institution," and that Cranston was wrong to imply that everyone does what Cranston had done. ], serving as Senator Cranston's attorney, alleged that other Senators had merely been better at “covering their tracks.”<ref name="Dewar" /> | |||
| ===Riegle and DeConcini: criticized for acting improperly=== | |||
| The Senate Ethics Committee ruled that Riegle and DeConcini had acted improperly by interfering with the investigation by the FHLBB.<ref name="PBS"/> | |||
| DeConcini later charged that McCain had leaked to the press sensitive information about the investigation that came from some of the closed proceedings of the Ethics Committee.<ref name="az-keating"/> McCain denied doing so, although one congressional investigator and several press reports concluded that McCain had been one of the main leakers during that time.<ref name="az-keating"/><ref name="bg022900">{{cite news | url=http://graphics.boston.com/news/politics/campaign2000/news/Pluck_leaks_helped_senator_to_overcome_S_L_scandal+.shtml | title=Pluck, leaks helped McCain to overcome S&L scandal | author=Robinson, Walter V. | publisher='']'' | date=2000-02-29}}</ref> | |||
| ===Glenn and McCain: cleared of impropriety but criticized for poor judgment=== | |||
| The Senate Ethics Committee ruled that the involvement of Glenn in the scheme was minimal, and the charges against him were dropped.<ref name="PBS"/> He was only criticized by the Committee for "poor judgment."<ref>Regens, James and Gaddie, Ronald., page 6 (Cambridge University Press 1996).</ref> | |||
| The Ethics Committee ruled that the involvement of McCain in the scheme was also minimal, and he too was cleared of all charges against him.<ref name="Salinger">Salinger, Lawrence. , page 478 (Sage Publications 2004).</ref><ref name="PBS"/> | |||
| McCain was criticized by the Committee for exercising "poor judgment" when he met with the federal regulators on Keating's behalf.<ref name="az-keating">{{cite news |url=http://www.azcentral.com/news/specials/mccain/articles/0301mccainbio-chapter7.html |title=John McCain Report: The Keating Five |author=Nowicki, Dan and ] |publisher='']'' |date=2007-03-01 |accessdate=2007-11-23}}</ref> The report also said that McCain's "actions were not improper nor attended with gross negligence and did not reach the level of requiring institutional action against him....Senator McCain has violated no law of the United States or specific Rule of the United States Senate."<ref name="nyt-sen-eth">{{cite news | url=http://query.nytimes.com/gst/fullpage.html?res=9D0CE2D71539F93BA15751C0A967958260 | title= Excerpts of Statement By Senate Ethics Panel | publisher='']'' | date=1991-02-28 | accessdate=2008-04-19}}</ref> On his Keating Five experience, McCain has said: "The appearance of it was wrong. It's a wrong appearance when a group of senators appear in a meeting with a group of regulators, because it conveys the impression of undue and improper influence. And it was the wrong thing to do."<ref name="az-keating"/> | |||
| Regardless of the level of their involvement, both senators were greatly affected by it. McCain would write in 2002 that attending the two April 1987 meetings was "the worst mistake of my life".<ref>McCain, ''Worth the Fighting For'', p. 161. Used to support direct quotation.</ref> Glenn has described the Senate Ethics Committee investigation as the low point of his life.<ref name="ohio-glenn">. Retrieved ].</ref> | |||
| The Senate Ethics Committee did not pursue, for lack of jurisdiction, any possible ethics breaches in McCain's delayed reimbursements to Keating for trips at the latter's expense, because they occurred while McCain was in the House.<ref name="bg022900"/> The ] said that it too lacked jurisdiction, because McCain was no longer in the House.<ref name="wtff-188">McCain, ''Worth the Fighting For'', p. 188. Gives best explanation for House treatment of Keating reimbursements.</ref> It said it did not require that McCain amend his existing financial disclosure forms for his House years, on the grounds that McCain had now fully reimbursed Keating's company.<ref name="wtff-188"/> | |||
| ===Reactions=== | |||
| Not everyone was satisfied with the Senate Ethics Committee conclusions. ], president of ], which had initially demanded the investigation, thought the treatment of the senators far too lenient, and said, "The U.S. Senate remains on the auction block to the Charles Keatings of the world."<ref name="time031191">{{cite news | url=http://www.time.com/time/magazine/article/0,9171,972507,00.html | title=Then There Was One | author=] | publisher='']'' | date=1991-03-11}}</ref> ], president of ], called it a "whitewash".<ref name="time031191"/> ] of '']'' said it was a classic case of the government trying to investigate itself, labelling the Senate Ethics Committee "shameless" for having "let four of the infamous Keating Five off with a wrist tap."<ref>{{cite news | url=http://www.newsweek.com/id/122946 | title=The Buck Stops Where? | author=] | publisher='']'' | date=1993-10-25}}</ref> ] of '']'' suspected the committee had timed its first report to coincide with the run-up to the ], minimizing its news impact.<ref name="time031191"/> One of the San Francisco bank regulators felt that McCain had gotten off too lightly, saying that Keating's business involvement with Cindy McCain was an obvious conflict of interest.<ref name="nyt-iseman">Jim Rutenberg, Marilyn W. Thompson, David D. Kirkpatrick and Stephen Labaton. , '']'', February 21, 2008. Retrieved February 21, 2008.</ref> | |||
| ==Aftermath== | |||
| Keating and Lincoln Savings became convenient symbols for arguments about what had gone wrong in America's financial system and society,<ref name="trust-389">Binstein and Bowden, ''Trust Me'', pp. 388–389.</ref> and were featured in popular culture references.<ref name="TV.com:Simpsons"></ref><ref name="trust-389"/> The senators did not escape infamy either.<ref name="nyt-iseman"/> By spring 1992, a deck of ] was being marketed, called "The Savings and Loan Scandal", that featured on their face Charles Keating holding up his hand, with images of the five senators portrayed as puppets on his fingers.<ref name="trust-389"/><ref name="az-keating"/> | |||
| Polls showed that most Americans believed the actions of the Keating Five were typical of Congress as a whole.<ref name="williams-103"/> Political historian Lewis Gould would later echo this sentiment, as well as Cranston attorney Dershowitz's argument, writing that, “the real problem for the 'Keating Three' who were most involved was that they had been caught.”<ref name="gould"/> | |||
| Cranston left office in January of 1993, and died in December of 2000. DeConcini and Riegle continued to serve in the Senate until their terms expired, but they did not seek re-election in 1994. DeConcini was appointed by President ] in February 1995 to the Board of Directors of the ].<ref>{{cite press release | url=http://www.clintonfoundation.org/legacy/042195-president-names-four-to-freddie-mac-board.htm | title=... about appointments to FHLMC | publisher=]}}</ref> | |||
| Glenn did choose to run for re-election in 1992, and it was anticipated that he would have some difficulty winning a fourth term in the Senate. However, Glenn handily defeated ] ] for one more term in the Senate before retiring in 1999. | |||
| After 1999, the only member of the Keating Five remaining in the U.S. Senate was ], who had an easier time gaining re-election in 1992 than he anticipated;<ref name="az-rebound"/> he survived the political scandal in part by becoming friendly with the political press.<ref name="az-rebound">{{cite news |url=http://www.azcentral.com/news/specials/mccain/articles/0301mccainbio-chapter8.html |title=John McCain Report: Overcoming scandal, moving on |author=Nowicki, Dan and ] |publisher='']'' |date=2007-03-01 |accessdate=2007-11-23}}</ref> McCain subsequently ] and became the ]. During the 2000s, several retrospective accounts of the controversy reiterated the contention that McCain was included in the investigation primarily so that there would be at least one Republican target.<ref name="Tolchin">Tolchin, Martin. , page 51 (2003).</ref><ref name="Bennett">{{cite book | last=Bennett | first=Robert S. | authorlink=Robert S. Bennett | title=In the Ring: The Trials of a Washington Lawyer | publisher=] | year=2008 | isbn=0307394433}} pp. 129, 133–134.</ref><ref name="Mitchell">Mitchell, Andrea. , pages 147-148 (Penguin 2006).</ref><ref name="Karaagac">Karaagac, John. , pages 163 and 169 (Lexington Books 2000).</ref> Glenn's inclusion in the investigation has been attributed to Republicans who were angered by the inclusion of McCain,<ref name="Tolchin" /> as well as committee members who thought that dropping Glenn (and McCain) would make it look bad for the remaining three Democratic Senators.<ref name="Bennett"/> | |||
| The scandal was followed by a number of attempts to adopt campaign finance reform—spearheaded by U.S. Sen. ] (D-OK)—but most attempts died in committee. A weakened reform was passed in 1993. Substantial campaign finance reform was not passed until the adoption of the ] in 2002. Bennett would later write that the Keating Five investigation did make a difference, as members of Congress were afterward far less likely to intercede with federal investigations on behalf of contributers.<ref>Bennett, ''In the Ring'', p. 148.</ref> | |||
| ==See also== | |||
| * ] | |||
| ==References== | |||
| {{reflist|2}} | |||
| {{John McCain}} | |||
| ] | |||
| ] | |||
| ] | |||
| ] | |||
| ] | |||
| ] | |||
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