Keating 5

[hammersley]

From the McCain article in Rollingstone that I posted earlier.....

Make-Believe Maverick : Rolling Stone

THE KEATING FIVE

In this context, McCain's recent record — opposing the new GI Bill, voting to repeal the federal minimum wage, seeking to deprive 3.8 million kids of government health care — looks entirely consistent. "When jackasses like Rush Limbaugh say he's not conservative, that's just total nonsense," says former Sen. Gary Hart, who still counts McCain as a friend.

Although a hawkish Cold Warrior, McCain did show an independent streak when it came to the use of American military power. Because of his experience in Vietnam, he said, he didn't favor the deployment of U.S. forces unless there was a clear and attainable military objective. In 1983, McCain broke with Reagan to vote against the deployment of Marine peacekeepers to Lebanon. The unorthodox stance caught the attention of the media — including this very magazine, which praised McCain's "enormous courage." It was the beginning of a beautiful friendship. McCain recognized early on how the game was played: The Washington press corps "tend to notice acts of political independence from unexpected quarters," he later noted. "Now I was debating Lebanon on programs like MacNeil/Lehrer NewsHour and in the pages of The New York Times and The Washington Post. I was gratified by the attention and eager for more."

When McCain became a senator in 1986, filling the seat of retiring Republican icon Barry Goldwater, he was finally in a position that a true maverick could use to battle the entrenched interests in Washington. Instead, McCain did the bidding of his major donor, Charlie Keating, whose financial empire was on the brink of collapse. Federal regulators were closing in on Keating, who had taken federally insured deposits from his Lincoln Savings and Loan and leveraged them to make wildly risky real estate ventures. If regulators restricted his investments, Keating knew, it would all be over.

In the year before his Senate run, McCain had championed legislation that would have delayed new regulations of savings and loans. Grateful, Keating contributed $54,000 to McCain's Senate campaign. Now, when Keating tried to stack the federal regulatory bank board with cronies, McCain made a phone call seeking to push them through. In 1987, in an unprecedented display of political intimidation, McCain also attended two meetings convened by Keating to pressure federal regulators to back off. The senators who participated in the effort would come to be known as the Keating Five.

"Senate historians were unable to find any instance in U.S. history that was comparable, in terms of five U.S. senators meeting with a regulator on behalf of one institution," says Bill Black, then deputy director of the Federal Savings and Loan Insurance Corporation, who attended the second meeting. "And it hasn't happened since."

Following the meetings with McCain and the other senators, the regulators backed off, stalling their investigation of Lincoln. By the time the S&L collapsed two years later, taxpayers were on the hook for $3.4 billion, which stood as a record for the most expensive bank failure — until the current mortgage crisis. In addition, 20,000 investors who had bought junk bonds from Keating, thinking they were federally insured, had their savings wiped out.

"McCain saw the political pressure on the regulators," recalls Black. "He could have saved these widows from losing their life savings. But he did absolutely nothing."

McCain was ultimately given a slap on the wrist by the Senate Ethics Committee, which concluded only that he had exercised "poor judgment." The committee never investigated Cindy's investment with Keating.

The McCains soon found themselves entangled in more legal trouble. In 1989, in behavior the couple has blamed in part on the stress of the Keating scandal, Cindy became addicted to Vicodin and Percocet. She directed a doctor employed by her charity — which provided medical care to patients in developing countries — to supply the narcotics, which she then used to get high on trips to places like Bangladesh and El Salvador.

Tom Gosinski, a young Republican, kept a detailed journal while working as director of government affairs for the charity. "I am working for a very sad, lonely woman whose marriage of convenience to a U.S. senator has driven her to . . . cover feelings of despair with drugs," he wrote in 1992. When Cindy McCain suddenly fired Gosinski, he turned his journal over to the Drug Enforcement Administration, sparking a yearlong investigation. To avoid jail time, Cindy agreed to a hush-hush plea bargain and court-imposed rehab.

Ironically, her drug addiction became public only because she and her husband tried to cover it up. In an effort to silence Gosinski, who was seeking $250,000 for wrongful termination, the attorney for the McCains demanded that Phoenix prosecutors investigate the former employee for extortion. The charge was baseless, and prosecutors dropped the investigation in 1994 — but not before publishing a report that included details of Cindy's drug use.

Notified that the report was being released, Sen. McCain leapt into action. He dispatched his top political consultant to round up a group of friendly reporters, for whom Cindy staged a seemingly selfless, Oprah-style confession of her past addiction. Her drug use became part of the couple's narrative of straight talk and bravery in the face of adversity. "If what I say can help just one person to face the problem," Cindy declared, "it's worthwhile."