It’s McCain’s Keating Five, All Over Again

Two months from now, we will look back and assert that the week of Sept. 15 was the week John McCain lost the presidential election of 2008.

It’s not the first time McCain’s been caught at a financial crime scene. Remember his first appearance on national radar? When the dust cleared from the 1980s S&L failure, there stood so-called reformer John McCain: one of five senators investigated for pressuring the Federal Home Loan Bank Board to drop its investigation of Lincoln Savings and Loan owner Charles Keating.

As the junior senator from Arizona, McCain had the closest ties to Keating. He received $112,000 in campaign contributions from Keating and associates. And McCain co-sponsored legislation relaxing regulations on savings and loans and allowing them to gamble investor funds on certain highly risky financial ventures. Sound familiar?

For his role in aiding Keating, McCain received only a reprimand for “poor judgment” from the Senate Ethics Committee. But, ever since, the “Keating Five” has been the symbol of how much influence money can buy in Washington. And McCain, having learned nothing from the experience, then turned around and repeated the same tricks on Wall Street.

In 2000, McCain supported legislation authored by Sen. Phil Gramm that forbade federal agencies from regulating financial derivatives that greased the skids for passing along risky mortgage-backed securities to investors. Today we’re suffering the consequences.

Gramm’s legislation was the key. Without it, AIG could never have veered from the solid ground of life insurance onto the shaky ground of sub-prime mortgages. And John McCain championed that legislation.

Suddenly, in response to this week’s disastrous economic news, and in one of the most daring flip-flops of American politics, John McCain is trying to reinvent himself as the champion of government regulation. But it’s too late for McCain to change his spots. Starting with Lincoln Savings and Loan, he has a lifetime record of fighting for big business and against necessary government oversight and regulation.

We remember Herbert Hoover for saying, on Oct. 26, 1929: “The fundamental business of the country … is on a sound and prosperous basis.” We’ll remember John McCain for saying, on Sept. 15, 2008: “The fundamentals of our economy are strong.”

That statement alone cost John McCain the White House, because it proved he doesn’t understand how bad people are hurting. Or, as Yogi Berra said, he just doesn’t understand “a nickel isn’t worth a dime today.”

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