Essentially what happened was Charles Keating was a rich campaign donor to many Congressmen, including John McCain. During the 1980’s Keating helped make McCain a Representative, then Senator, contributing (along with friends) $56,000 to McCain’s House races in 1982 and 1984, and $54,000 to McCain’s 1986 Senate race. During those years McCain used Keating’s personal jet to take 9 family trips, including yearly vacations to Keating’s exclusive Bahama vacation home, which he did not disclose on his tax returns or to the Senate until years later when he was investigated for accepting favors from Charles Keating and Keating’s Lincoln Savings and Loan.

In 1987 the Lincoln Savings and Loan was under investigation by federal auditors who were looking at Keating’s banking practices. Keating was using bank money to speculate on investments (similar behavior by bank executives in the 1920’s led to the Great Depression). Keating asked the contacts he had so carefully groomed in the Senate to put the kabosh on the federal investigators.

John McCain and four other Senators met with federal auditors twice and put pressure on them to stop the investigation. The Senators bought two years for Keating, but in 1989 the Lincoln Savings and loan went belly up. The FDIC bailout cost taxpayers $3.4 billion and helped push the country into a recession. Keating was convicted of 73 counts of fraud, racketeering, and conspiracy and sentenced to 10 years in prison.

The Senate launched an investigation of the Keating Five and criticized McCain and the others for “questionable behavior”. For breaking Senate ethics rules and not reporting gifts, McCain and the others were given a slap on the wrist.

One lasting note: In 1986, McCain’s wife, Cindy, and her father invested $359,000 in a shopping center owned by Charles Keating one year before McCain first met with federal officials. They later sold their $359,000 investment for $15,000,000.

During the 2000 Republican Presidential Primaries, Slate.com writer Chris Suellentrop wrote an excellent in-depth feature article about John McCain and his role in the Keating Five. This is a must read article for every American, especially for anyone who thinks John McCain is a hero.

Two Important things to know before you read the article:

1. John McCain admitted to intentionally filing false income tax returns to defraud the IRS by not claiming thousands of dollars in gifts McCain and his family received from Charles Keating and Keating’s company. Years later, when the IRS noticed Keating’s company had written off the gifts to McCain as business expenses, McCain fessed up and admitted filing false returns and made a “donation” to the U.S. Treasury to cover the amount he defrauded American tax payers. (Committing tax fraud is one of the least offensive things John McCain has done over his career, but this article just focuses on his role in the Keating Five, and the Lincoln Savings and Loan scandal of the late 1980’s-early 1990’s). McCain also leaked information about the Keating Five to the press multiple times in an effort to appear above the other Senators in the scandal. A 1989 Phoenix New Times article summed it up best with their title - McCain: The Most Reprehensible of the Keating Five.

2. John McCain’s wife, Cindy McCain, along with her father, made a $359,000 investment in retail property owned by Charles Keating in 1986, a year before John McCain first met with federal regulators on behalf of Keating. Keating was later convicted on 73 counts of fraud, conspiracy, and other crimes. Years later, Cindy McCain sold her investment for $15,000,000.

For anyone not aware of the Keating Five, here’s a very simple summary:

Charles Keating owned a savings and loan in California. He was illegally using the money of his bank’s customers to give loans to himself and friends that they didn’t have to repay, and to speculate on risky real estate investments, which was strictly forbidden by U.S. law (and was one cause of the Great Depression).

When the feds found out what was going on and launched an investigation into Keating and his company, Keating called five U.S. Senators whom he had wined, dined, and lavished with hundreds of thousands of dollars in campaign donations and personal gifts.

Keating asked the five Senators to tell the feds to bug off, and the five Senators, later known as the Keating Five, obliged, meeting with federal investigators twice and pressuring them to stop investigating Keating’s crimes. They bought Keating some time, but the feds didn’t give up and eventually Keating was nailed. The reason the feds were so persistent was because Keating wasn’t playing with mere chump change. Keating blew $3.4 billion through illegal personal loans and bad investments, and the FDIC had to reimburse Keating’s customers who had been ripped off.

(Background Info - Keating wasn’t the only Savings and Loan owner who was committing fraud, 20% of the S&L’s that failed during that three year period were found to have been caused by fraud and/or insider trading. The failure of the Lincoln Savings and Loan and other S&L’s pushed the country into a recession, costing the U.S. government $126 billion dollars in FDIC insurance payouts to investors. All of this came to a crescendo during the first year of the presidency of George H.W. Bush, who pushed through the S&L bailout plan to keep the economy afloat.)

When the involvement of the Keating Five was made public, a scandal erupted and the Senate Ethics Committee launched their own investigation into whether the Keating Five had violated Senate ethics rules. The other four Senators left office either immediately or within one term. John McCain was formally rebuked by the Senate Ethics Committee for exercising “poor judgment” for intervening with the federal regulators on behalf of Keating, but because McCain accepted Keating’s gifts of travel and vacations to Bahama while McCain was a member of the House of Representatives (he served one term there before moving to the Senate), the Senate claimed they had no jurisdiction to censure McCain. (However the meetings to pressure federal regulators occurred during the first few months of McCain serving in the Senate in 1987, so that excuse doesn’t hold up)

John McCain then went back to the drawing board and re-invented himself as “the Straight-Talk Express” and the media gobbled it up. “Tax-Evading-Criminal” doesn’t sound as catchy as “Straight-Shooting-War-Hero”.

Ever since the scandal, when McCain lies today, it’s never questioned, because he’s a “straight talker”. The man has more skeletons in his closet than any politician in history. The Keating Five is just one bone.

After reading the Slate article, ask yourself: if Obama or any other candidate had a scandal such as the Keating Five in their past, would the mainstream media never question it? Could any other candidate even have a political career after the Keating Five? For the other four Senators, the answer is no. And while Charles Keating went to prison for his role in the scandal, John McCain swept it under the rug and could soon be President of the United States of America.

Read the full Slate.com article here.

The FDIC also has a list of recommendations for further reading on Charles Keating and the Lincoln Savings and Loan.

How Charles Keating Taunted McCain... calling him a wimp... and goading him into attending a late night meeting where McCain wanted the auditors to let Lincoln Bank continue making real estate loans without carrying out credit checks, a clear violation of the law. This is also the practice that has led to the current US economic crisis

A McCain Temper Tantrum was at the root of the Keating Five Scandal

Charlie Keating was running a series of shell corporations to hide cash he moved illegally from Lincoln Savings and Loan. Lincoln became the largest S & L to collapse and cost US taxpayers thousands of millions of dollars for a bail out. When Federal bank regulators, led by Ed Gray, tried to limit Keating’s worst excesses, Keating sent a letter to McCain describing the bank board (FHLBB) as a police state under a mad dog’s leadership.

And then McCain had one of his melt downs.

This was the key moment in McCain’s Keating Five scandal and it occurred at March 19 1987.

Keating asked McCain to pressure bank auditors not to enforce the law against Lincoln S&L. McCain told Keating he was uncomfortable strong arming the nation’s financial regulators. Keating taunted him, “McCain’s a wimp.” At 1:30, in his senate office, McCain exploded into fury, “One thing I’m not is a coward.” McCain screamed at Keating that he hadn’t lived in a box for five years to have his courage questioned. McCain’s aides were very surprised by McCain’s tantrum and even Keating begged him to calm down.

McCain didn’t back off. He shouted that he knew it was not appropriate for him to negotiate on Keating’s behalf with regulators who were looking into the illegal activities at Lincoln Savings and Loan. Keating told McCain that he should not bother going to the meeting. McCain was still mad and replied, “No, I’m going to that meeting.”

Later that day, Keating boasted that he “knew how to get McCain’s attention.”

McCain met Ed Gray on April 2, 1987. Against all protocol, McCain didn’t allow Gray to bring any staff or attorneys to the meeting and also excluded his own aides. He later said this was because he wanted to be able to deny everything. McCain tried to force Gray to ignore a banking regulation that affected Keating’s Lincoln S&L. McCain kept referring to Keating as, “my friend.”

Seven days later, bank regulators were summoned to the Senate for an unusual late night meeting. McCain wanted the auditors to let Lincoln continue making real estate loans without carrying out credit checks, a clear violation of the law. This is also the practice that has led to the current US economic crisis. When asked by his aides about the meeting, McCain whistled through his teeth rather than answer their questions.

Here it is in a nut shell:

In 1987, McCain tried to force bank regulators to ignore the law for his friend and benefactor, Charlie Keating. McCain knew this was improper but plunged recklessly into the meetings after Keating taunted him for being a coward.

McCain almost destroyed his career by accepting bribes and letting mere words goad him into knowingly breaking the law.

If he was President, what else might McCain’s temper destroy?