The current financial crisis obligates us to understand each candidate’s attitudes on economic oversight and corporate influence in regulation of financial services. Senator McCain’s involvement in the savings and loan scandal of the late ’80s and early ’90s may reflect a dangerous and misjudged philosophy on the boundaries of corporate deregulation.
This featured video examines Senator McCain’s role in advocating for regulatory conditions which facilitated the promulgation of corporate fraud in the Keating scandal.
John McCain was accused of improperly aiding his political patron, Charles Keating, chairman of the Lincoln Savings and Loan Association. Keating’s Lincoln Savings and Loan Association took advantage of deregulation in the 1980s to make risky investments with its depositors‘ money. McCain intervened on behalf of Charles Keating with federal regulators tasked with preventing banking fraud, and championed legislation to delay regulation of the savings and loan industry, ultimately enabling Keating to perpetuate his fraudulent activities at a total cost of more than $125 billion to taxpayers.
John McCain was reprimanded by the bipartisan Senate Ethics Committee and remains the first reprimanded Senator to receive a major party nomination for president.
The Keating scandal shares common elements with today’s credit crisis, where insufficient regulation and lack of independence between the financial industry and Congress have allowed financial institutions to make high-risk loans and profits through exploitation of lax governance standards. In this regard, Senator McCain’s record has placed him at odds with history.
Keating’s legacy may yet confer a social utility by highlighting the economic failings of a presidential candidate. It seems certain, though, that John McCain will pray his notional chickens do not come home to roost.
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