succumbing to peer pressure

Monday, October 06, 2008

Where's a Harvard-educated economist when you need him?

The Obama campaign has put out this website, highlighting the role McCain played in the savings and loan scandal of the 80s and 90s. It seems pretty damning to me:

John McCain was accused of improperly aiding his political patron, Charles
Keating, chairman of the Lincoln Savings and Loan Association. The bipartisan
Senate Ethics Committee launched investigations and formally reprimanded Senator
McCain for his role in the scandal


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

But I also realize that it's paid for by the Obama for president campaign (they're making the argument that McCain made bad economic decisions back then, and can't be trusted to make any better ones now), so it ain't exactly an objective take on things. Anyone want to provide an alternative source or interpretation of events?


Anonymous Anonymous said...

I have a bat-signal? Cool! Is it shaped like a dollar sign?

OK, I don't a whole ton of detail about this, but from my initial information it seems that the general story is as follows. Keating was running an S&L and was somehow defrauding people. He was also donating a lot to McCain, and was a reasonably close friend of his. Regulators were looking to investigate/crack down on Keating, so Keating contacted McCain and four other (Democratic) senators, hoping to get them to exert influence to get the regulators off his back. McCain in various ways (e.g. letters, meetings in hotel rooms where the five senators confronted a regulator and said they were deeply interested in this issue) pushed for Keating to be given a pass, but when things started to get really shady he backed off (while three of the five kept pushing). Ultimately in the ethics investigation decided that McCain didn't break any specific rule or law, but that his attempts to influence the process were quite inappropriate. Keating ultimately went to jail for 10 years. McCain in his book called it the biggest mistake of his life, and claims that is why he became a "reformer".

Obama's main plan of attack, I believe, is to make this a part of the broader critique that McCain has dangerous inclinations to deregulate at any cost (much like the current financial crisis). His zealousness to defend Keating against the regulators caused him to cross lines. It will be interesting to see how this plays contra-Ayers. Fraud is less bad than bombings, and McCain didn't break an explicit ethics rule; but he was much more directly involved than Obama with Ayers, and it is a topic tied to the overall message on the economy, and thus may stick more. We'll see.


10:54 AM  
Blogger Megan said...

Weird. Looks like my earlier comment didn't get posted. Anyway, just saying thanks, Steve! And I'll get right on that bat-signal...I guess first I have to find a mob boss to kill...

12:22 PM  

Post a Comment

<< Home