Monday, October 06, 2008

Keating Economics: John McCain and a Financial Crisis

People in glass houses shouldn't throw stones.

As Palin has brought up the fact that Obama knew Ayers, and falsely implied that this means he befriends "terrorists"; the Obama camp has responded by producing a web ad which highlights the actual fact that McCain was involved in the Keating Five scandal and providing an address to a page which provides further links to newspaper articles explaining McCain's role in that scandal.

This really does highlight the difference between the two campaigns. Obama is being tarred by association.

The Washington Post:

Both Obama and Ayers were members of the board of an anti-poverty group, the Woods Fund of Chicago, between 1999 and 2002. In addition, Ayers contributed $200 to Obama's re-election fund to the Illinois State Senate in April 2001, as reported here. They lived within a few blocks of each other in the trendy Hyde Park section of Chicago, and moved in the same liberal-progressive circles.

But the Obama-Ayers link is a tenuous one.

Whatever his past, Ayers is now a respected member of the Chicago intelligentsia, and still a member of the Woods Fund Board. The president of the Woods Fund, Deborah Harrington, said he had been selected for the board because of his solid academic credentials and "passion for social justice."

"This whole connection is a stretch," Harrington told me. "Barack was very well known in Chicago, and a highly respected legislator. It would be difficult to find people round here who never volunteered or contributed money to one of his campaigns."
However, rather than be accused of guilt merely by association, McCain was actually reprimanded by the Senate Ethics Committee for his behaviour during this scandal.

From The Los Angeles Times:
Once upon a time, a politician took campaign contributions and favors from a friendly constituent who happened to run a savings and loan association. The contributions were generous: They came to about $200,000 in today's dollars, and on top of that there were several free vacations for the politician and his family, along with private jet trips and other perks. The politician voted repeatedly against congressional efforts to tighten regulation of S&Ls, and in 1987, when he learned that his constituent's S&L was the target of a federal investigation, he met with regulators in an effort to get them to back off.

That politician was John McCain, and his generous friend was Charles Keating, head of Lincoln Savings & Loan.

Keating went to prison, and McCain's Senate career almost ended. Together with the rest of the so-called Keating Five -- Sens. Alan Cranston (D-Calif.), John Glenn (D-Ohio), Don Riegle (D-Mich.) and Dennis DeConcini (D-Ariz.), all of whom had also accepted large donations from Keating and intervened on his behalf -- McCain was investigated by the Senate Ethics Committee and ultimately reprimanded for "poor judgment."

But the savings and loan crisis mushroomed. Eventually, the government spent about $125 billion in taxpayer dollars to bail out hundreds of failed S&Ls that, like Keating's, fell victim to a combination of private-sector greed and the "poor judgment" of politicians like McCain.
Banks being bailed out to the tune of billions because of private sector greed and McCain right in the middle of it accepting donations and free vacations?

Unlike Palin's false charge of guilt by association, the Obama team can put McCain right at the centre of a financial crisis, caused by the same greed which McCain now condemns Wall Street for.

They appear to want to tar Obama for being on the same committee as a man who was never found guilty of any crime, whilst we are supposed to forget that McCain was part of the Keating Five and that Keating was actually jailed for what he did.

Click title for the Keating page.


Here's the whole thing. And please note that, despite his role in the scandal at Lincoln Savings, his first reaction to the recent economic crisis was to call for more deregulation.

As this film points out, and as recent events are proving, with a global economy, this mindset will have ramifications world wide. They will not simply be confined to the US.

Deregulation is the very last thing we need at the moment. We need strict regulation. And yet, astonishingly, as recently as March 25th this year, McCain instinctively said the following:
While I was travelling overseas, our financial markets experienced another, unfortunately another, round of upheaval. Our financial market approach should include encouraging increased capitol in financial institutions by removing regulatory accounting and tax impediments to raising capitol.
That statement is the proof that he has learned nothing. And his calls - at this late date - for regulation, should be seen as the desperate attempt that they are to cover his past errors. But he has learned nothing. He simply wants to win an election. If he didn't learn from his role in Lincoln Savings, and his March 25th statement proves that he didn't, then there's no reason to believe him when he claims to have absorbed the lesson now.

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