In the 1980’s the deregulation of the financial institutions led to the collapse of 747 savings and loans and the cost to the American people of $160.1 billion. The subsequent economic slowdown brought on the recession of the 1990’s and the slowest housing market since WWII.
The most well known of the savings and loan closings was the Lincoln Savings and Loan which defrauded 23,000 bondholders and many elderly investors lost their life savings. Charles Keating, the chairman of Lincoln Savings and Loan, served five years for fraud, racketeering and conspiracy. During the investigation of the savings and loan collapse it was discovered that Charles Keating had paid $1.3 million to various senators and asked that they help him resist regulators who would and could have prevented his actions. Based on the senators’ requests, the regulators backed off and the American people paid the price. One of those senators was John McCain. He became known as one of the Keating 5.
You would think that being involved in a scandal which almost cost you your career and cost many people their life savings would make you more circumspect in your dealings with people, but not John McCain. You see, while McCain claimed that his personal relationship with Charles Keating ended in 1987 because Keating called him a wimp, that didn’t stop the McCain family from being long term business partners with Keating in a partnership called Fountain Square Associates. The McCain family remained in a partnership with Keating throughout his trial and prison sentence for fraud, only severing it when Fountain Square was sold 10 years ago.
So as John McCain complains about Barack Obama being on the Annenberg board with William Ayres, remember that he was willing to continue to make money with a man who was sent to jail for defrauding senior citizens and selling junk bonds. What’s the difference, you ask? When William Ayres committed his crime, Obama was 8. When Keating was committing his crimes, McCain was a business partner.