Wrong From the Beginning
Sen. Obama’s latest campaign video, “Keating Economics: John McCain and the Making of a Financial Crisis,” features William Black, the former deputy director of the Federal Home Loan Bank Board, who attended a meeting, in April 1987, of McCain, four other senators and Black’s boss at the time, Edwin Gray.
The “Keating Five” scandal became the symbol of the collapse of the nation’s savings and loan industry and the ensuing $124 billion government bailout.
Black and Gray testified before the Senate Ethics Committee in 1990 that McCain, along with Sens. Dennis DeConcin (D-Ariz.), Alan Cranston (D-Calif.), John Glenn (D-Ohio) and Don Riegle (D-Mich.), pressured Gray to relax an investment regulation opposed by Charles Keating. The committee ruled that McCain exercised “poor judgment” for his role in the affair.
Black, now an associate professor of economics and law at the University of Missouri-Kansas City, told me that McCain has long opposed regulation of the financial markets.
“McCain has gotten this stuff wrong from the beginning,” Black said. “One his first acts as a member of the House was trying to stop the re-regulation of the thrift industry” by opposing efforts by regulators to increase capital reserves and reduce the amount of money thrifts could invest, as well as other revisions sought by regulators.
With the economy heading into recession, Obama is bringing up McCain’s unsavory ties to Keating in an attempt to focus the blame for the current financial crisis on the man who was in the eye of the last financial storm to plague the nation the nation–the S&L crisis.
It’s a strategy that could work.