Back in 1999, John McCain acknowledged his role in the 1980's Keating Five savings and loan scandal that rightly stained his career. "The fact is," he said, "it was the wrong thing to do, and it will be on my tombstone and deservedly so." But again facing withering criticism as a second financial crisis grips the United States, his campaign today instead claimed McCain's intervention 20 years ago with federal regulators on behalf of future convicted felon Charles Keating was merely "a political smear job."
McCain lawyer John Dowd described McCain's "former relationship with Charles Keating as 'social friends,'" and called the situation a "classic political smear job on John."
Sadly for McCain, Dowd's yarn matches neither the facts nor McCain's self-proclaimed resurrection as a reformer in the wake of his near-death experience in the Keating Five imbroglio.
Earlier this year, the Boston Globe summarized McCain's close relationship with Keating and his decision to intervene with federal regulators on his behalf:
McCain met Keating in 1982, during McCain's successful run for Congress, and soon began accepting offers from Keating to fly McCain's family on a corporate plane to Keating's house in the Bahamas. McCain did not pay for most of the trips until years later, when the matter became public.
Keating, meanwhile, complained regularly to McCain that a proposed regulation would hurt his business. Known as the "direct investment" rule, it limited the amount that savings-and-loan institutions could invest from their assets. In 1985, after having "heard frequently from Charlie on the matter," McCain decided that Keating's complaints "were sound enough to warrant our assistance." He cosponsored a resolution sought by Keating, but it failed to postpone the regulation, McCain wrote in his autobiography.
By then, Keating was one of McCain's most important benefactors; McCain received $112,000 in campaign donations from Keating and his Lincoln associates, mostly between 1982 and 1986.
It was in April 1987 that McCain fatefully joined four other senators in meeting with Edwin Gray, chairman of the Federal Home Loan Bank Board in Washington. After that meeting, Gray told his associate William K. Black that he was "very upset" that the senators were trying to pressure him.
Ultimately, a Senate ethics panel agreed with that assessment. California Democrat Alan Cranston was censured for "an impermissible pattern of conduct," while Senators DeConcini (D-AZ) and Riegle (D-MI) were criticized for actions which "gave the appearance of being improper." As for McCain, he and John Glenn (D-OH) were admonished for exercising "poor judgment."
McCain, who had told the Ethics Committee that his role in support of Keating was "to help constituents in a proper fashion," reacted to the panel's findings in 1991, "I am, of course, relieved that I have been exonerated."
And so it was that John McCain survived the Keating Five and S&L scandals with his career, if not his reputation, intact. As the New York Times recounted this past February:
When Lincoln went bankrupt in 1989 - one of the biggest collapses of the savings and loan crisis, costing taxpayers $3.4 billion - the Keating Five became infamous. The scandal sent Mr. Keating to prison and ended the careers of three senators, who were rebuked by the Senate Ethics Committee in 1991 for intervening. Mr. McCain, who had been a less aggressive advocate for Mr. Keating than the others, was reprimanded only for "poor judgment" and was re-elected the next year.
Some people involved think Mr. McCain got off too lightly. William Black, one of the banking regulators the senator met with, argued that Mrs. McCain's investment with Mr. Keating created an obvious conflict of interest for her husband. (Mr. McCain had said a prenuptial agreement divided the couple's assets.) He should not be able to "put this behind him," Mr. Black said. "It sullied his integrity."
For his part, John McCain has acknowledged the blight on his record, if not his sense of his own honor. As Senator McCain put it in December 1999, the taint of his Keating Five role is permanent:
"The fact is, it was the wrong thing to do, and it will be on my tombstone and deservedly so."
But McCain's seemingly humble admission of guilt could not erase the temper tantrums the Arizona Senator displayed at the height of the crisis. As has been documented so many times since, John McCain in 1989 exploded at the press when it dared to questioned his behavior.
While McCain was ultimately admonished by a Senate ethics panel only for "poor judgment," his behavior in response to the white hot press spotlight raises troubling questions about his fitness to lead. As the Arizona Republic recalled in March 2007:
On Oct. 8, 1989, The Arizona Republic revealed that McCain's wife and her father had invested $359,100 in a Keating shopping center in April 1986, a year before McCain met with the regulators.
The paper also reported that the McCains, sometimes accompanied by their daughter and baby-sitter, had made at least nine trips at Keating's expense, sometimes aboard the American Continental jet. Three of the trips were made during vacations to Keating's opulent Bahamas retreat at Cat Cay.
McCain also did not pay Keating for some of the trips until years after they were taken, after he learned that Keating was in trouble over Lincoln. Total cost: $13,433.
When the story broke, McCain did nothing to help himself.
"You're a liar," McCain said when a Republic reporter asked him about the business relationship between his wife and Keating.
"That's the spouse's involvement, you idiot," McCain said later in the same conversation. "You do understand English, don't you?"
He also belittled reporters when they asked about his wife's ties to Keating.
"It's up to you to find that out, kids."
Ultimately, the paper ran the story. After it broke, McCain held a news conference with his rage in check and calmly answered questions for 90 minutes. (In a preview of the 2008 campaign, McCain's defense was that his wife's finances - and extreme wealth - were separate from his own.)
But McCain's response also revealed another disturbing pattern that continues to this day. After launching a furious tirade against the media, McCain sought to forgiveness after the fact. As the Boston Globe described the episode:
When reporters questioned the investment, John McCain wrote in his autobiography, he "shouted at them, cursed them, and eventually slammed the phone down on them. It was ridiculously immature behavior."
In that same 2002 book, McCain pondered, "I don't know how (The Republic journalists) would have reported the story had I been more civil and understanding or just more of a professional during the interview."
Twenty years later, Americans are watching history repeat itself. John McCain's closest aides and advisors, including campaign manager Rick Davis, chief of staff Mark Buse and transition manager William Timmons, garnered huge paydays from their work on behalf of failed Wall Street firms, Fannie Mae and Freddie Mac. And with his pendulum-like response to the financial meltdown and his bitter attacks against Barack Obama, John McCain is again lashing out at those rightly criticizing his poor judgment.
The truth, the old saying goes, will set you free. But not if you're John McCain. Then it's just called "a smear."