Is John McCain a Crook?
Chris Suellentrop
Posted Friday, Feb. 18, 2000, at 2:35 PM ET

The controversial George W. Bush-sponsored poll in South Carolina
mentioned John McCain's role in the so-called Keating Five scandal, and
McCain says his involvement in the scandal "will probably be on my
tombstone." What exactly did McCain do?

In early 1987, at the beginning of his first Senate term, McCain
attended two meetings with federal banking regulators to discuss an
investigation into Lincoln Savings and Loan, an Irvine, Calif., thrift
owned by Arizona developer Charles Keating. Federal auditors were
investigating Keating's banking practices, and Keating, fearful that the
government would seize his S&L, sought intervention from a number of
U.S. senators.

At Keating's behest, four senators--McCain and Democrats Dennis
DeConcini of Arizona, Alan Cranston of California, and John Glenn of
Ohio--met with Ed Gray, chairman of the Federal Home Loan Bank Board, on
April 2. Those four senators and Sen. Don Riegle, D-Mich., attended a
second meeting at Keating's behest on April 9 with bank regulators in
San Francisco.

Regulators did not seize Lincoln Savings and Loan until two years later.
The Lincoln bailout cost taxpayers $2.6 billion, making it the biggest
of the S&L scandals. In addition, 17,000 Lincoln investors lost $190
million.

In November 1990, the Senate Ethics Committee launched an investigation
into the meetings between the senators and the regulators. McCain,
Cranston, DeConcini, Glenn, and Riegle became known as the Keating Five.

(Keating himself was convicted in January 1993 of 73 counts of wire and
bankruptcy fraud and served more than four years in prison before his
conviction was overturned. Last year, he pleaded guilty to four counts
of fraud and was sentenced to time served.)

McCain defended his attendance at the meetings by saying Keating was a
constituent and that Keating's development company, American Continental
Corporation, was a major Arizona employer. McCain said he wanted to know
only whether Keating was being treated fairly and that he had not tried
to influence the regulators. At the second meeting, McCain told the
regulators, "I wouldn't want any special favors for them," and "I don't
want any part of our conversation to be improper."

But Keating was more than a constituent to McCain--he was a longtime
friend and associate. McCain met Keating in 1981 at a Navy League dinner
in Arizona where McCain was the speaker. Keating was a former naval
aviator himself, and the two men became friends. Keating raised money
for McCain's two congressional campaigns in 1982 and 1984, and for
McCain's 1986 Senate bid. By 1987, McCain campaigns had received
$112,000 from Keating, his relatives, and his employees--the most
received by any of the Keating Five. (Keating raised a total of $300,000
for the five senators.)

After McCain's election to the House in 1982, he and his family made at
least nine trips at Keating's expense, three of which were to Keating's
Bahamas retreat. McCain did not disclose the trips (as he was required
to under House rules) until the scandal broke in 1989. At that point, he
paid Keating $13,433 for the flights.

And in April 1986, one year before the meeting with the regulators,
McCain's wife, Cindy, and her father invested $359,100 in a Keating
strip mall.

The Senate Ethics Committee probe of the Keating Five began in November
1990, and committee Special Counsel Robert Bennett recommended that
McCain and Glenn be dropped from the investigation. They were not.
McCain believes Democrats on the committee blocked Bennett's
recommendation because he was the lone Keating Five Republican.

In February 1991, the Senate Ethics Committee found McCain and Glenn to
be the least blameworthy of the five senators. (McCain and Glenn
attended the meetings but did nothing else to influence the regulators.)
McCain was guilty of nothing more than "poor judgment," the committee
said, and declared his actions were not "improper nor attended with
gross negligence." McCain considered the committee's judgment to be
"full exoneration," and he contributed $112,000 (the amount raised for
him by Keating) to the U.S. Treasury.
-salon.com