John McCain and the making of a financial crisis - Keating Economics

A new video, out at noon eastern today, exposes John McCain's association with Charles Keating, chairman of the Lincoln Savings and Loan Association, and the scandals that rocked the banking world in the late 80s and early 90s. Mr. McCain was formally reprimanded by a bi-partisan Senate Ethics Committee for his part in the scandal. Perhaps "exposes" is a bit exaggerated, as these are charges from some years ago. But the relationship between McCain and Keating is as poignant today as it was then.

Full details of these incidents are outlined below, pulled from the Keating Economics website. See the full video on allvoices or follow the website at KeatingEconomics.com.

At the heart of the scandal was Keating's Lincoln Savings and Loan Association, which took advantage of deregulation in the 1980s to make risky investments with its depositors' money. McCain intervened on behalf of Charles Keating with federal regulators tasked with preventing banking fraud, and championed legislation to delay regulation of the savings and loan industry -- actions that allowed Keating to continue his fraud at an incredible cost to taxpayers.

When the savings and loan industry collapsed, Keating's failed company put taxpayers on the hook for $3.4 billion and more than 20,000 Americans lost their savings. John McCain was reprimanded by the bipartisan Senate Ethics Committee, but the ultimate cost of the crisis to American taxpayers reached more than $120 billion.

The Keating scandal is eerily similar to today's credit crisis, where a lack of regulation and cozy relationships between the financial industry and Congress has allowed banks to make risky loans and profit by bending the rules. And in both cases, John McCain's judgment and values have placed him on the wrong side of history.