This past weekend I attended a seminar about modern economic theories. One of my fellow attendees was Professor William Black of the University of Missouri at Kansas City (UMKC). Bill Black teaches both law and economics, and he is an expert on the 1980s savings and loan collapse. His experiences as a federal regulator during that time led him to write an excellent and highly-recommended book, The Best Way to Rob a Bank is to Own One (University of Texas Press 2005).
The largest failure from that last big collapse two decades ago was the failure of Lincoln Savings and Loan, a California thrift institution controlled by Charles Keating. Keating was an Arizona real estate developer who epitomized the title of Bill Black's book. He bought Lincoln Savings and Loan so that he could rob it blind. His Arizona real estate ventures weren't doing very well, so he needed to refinance them at higher values, and no bank would lend him the quantity of money he needed given the collateral value he was able to offer. So, his innovative strategy to get more money for his Arizona real estate ventures was to buy himself a bank, in this case, a savings and loan. However, in order to make this deal work for him, he had to violate federal banking regulations in a rather big way. When the regulators were originally in a position where they were about to issue an enforcement order against him, Keating had already sold about $600 million worth of real estate to Lincoln Savings through a series of fraudulentKeating Five," he managed to prevent regulatory enforcement for roughly two years, causing the cost to the US taxpayers to rise from the original $600 million of "at risk" investments (not all of which would have been lost) to an ultimate realized loss of about $3.4 billion. And the man assigned to take notes as the Keating Five senators pressured federal regulators was none other than Bill Black. Using his influence with a group of five US senators, forever known as the "Keating Five."
If you paid attention to the Keating Economics video created by the Obama campaign, Bill Black was the star of that video, narrating the story of how Charles Keating robbed the US taxpayer of $3.4 billion, as noted above. However, during the seminar last Sunday, it was disclosed that over four hours of raw footage was shot, and only a few minutes was actually used by the Obama campaign. Frankly, I think the Obama campaign pulled its punches, or else it is saving a lot of good stuff contained within the extra footage for a follow-up video sometime down the road.
Anybody who is familiar with the Keating Five scandal knows that Charles Keating, his associates and his companies, made massive contributions to the five senators of at least $1.3 million. And, it was briefly mentioned in the Keating Economics video that John McCain and his family made trips to a private resort in the Bahamas on a plane owned by Charles Keating. Clearly, the relationship between Charles Keating and the McCain family was a lot closer than that of politician and constituent. Still, it is possible to dismiss campaign contributions and travel junkets as not being all that corrupt, given the usual practices by our elected officials.
However, what was not in the Keating Economics video was the story Bill Black told about the direct profits Cindy McCain and her family made from Keating real estate developments. This isn't exactly inside knowledge, as the Los Angeles Times noted in its article about the Obama video that "Cindy McCain and her family were also investors with Keating in a shopping mall developed by one of Keating's companies."
The US taxpayers lost $3.4 billion when Lincoln Savings failed. That $3.4 billion largely represented money paid out to various people and organizations for various pieces of property that ended up being worth far less than Lincoln Savings paid for them. That $3.4 billion went someplace, and it seems fair to me to assert that some portion of that $3.4 billion went to Cindy McCain and her family, if not for that particular shopping center mentioned by the Los Angeles Times, then more likely than not for other real estate ventures in Arizona or elsewhere.
It is very hard for me not to view Cindy McCain's Keating profits (or is it rather "cheating profits?") as a direct bribe paid out to Senator John McCain through a close family member. There have been numerous scandals over the years about various politicians whose spouse was paid by some company or another under circumstances which made it at least seem like it could be an outright bribe to influence the politician. Somehow, perhaps due to the great wealth of Cindy McCain and her family, John McCain managed to avoid having the Senate Ethics Committee or any prosecutor look too closely at the profits Cindy McCain and her family made off of their relationship with Charles Keating. My personal bottom line on this is that John McCain is one of the most corrupt senators the United States has ever had. And he got away with it. And now, he wants to be President of the United States.
So, after considering this story, ask yourself this: how much could John McCain steal from the US taxpayers as President? Consider that question before you vote this fall!
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