Why is McCain Playing Political Games in a Serious Crisis?

Can McCain show any more ignorance of economics than he has this week? And why is he playing political games - misleading people about the cause of the financial crisis so he can try to score points by (falsely) blaming Obama - during a serious crisis?

Let's start with McCain's comments from earlier today:

John McCain Is Not Qualified to Be President, by Brad DeLong: Since before 1844 central banks have been in the business of managing financial crises. That's what they do. Milton Friedman is spinning in his grave. The prevention of large-scale bank failures--"bailouts," in McCain's terms--is an essential part of responsibly managing the money supply.

John McCain does not know that. And nobody working for John McCain knows that:

John McCain: Finally, the Federal Reserve should get back to its core business of responsibly managing our money supply and inflation. It needs to get out of the business of bailouts. The Fed needs to return to protecting the purchasing power of the dollar. A strong dollar will reduce energy and food prices. It will stimulate sustainable economic growth and get this economy moving again...

pgl says "I was stunned." For good reason. And Brad didn't even note that McCain misunderstands the Fed's legal mandate. If he did, he wouldn't say that their job is to protect the dollar.

But that is not the most stunningly ignorant or misleading thing he said today. From his speech on the crisis:

The financial crisis we’re living through today started with ... the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.

I'm going to turn it over to Justin Fox:

Is McCain right about Fannie and Freddie?: John McCain, after feinting in the direction of SEC Chairman Chris Cox, has decided that Fannie Mae and Freddie Mac are to blame for all our nation's ills. This would be convenient because Fannie in particular had a long and lucrative symbiotic relationship with the Democratic Party. But is it true? ...

[W]hen the mortgage markets began to go absolutely crazy in late 2003, Fannie and Freddie were barely in the picture. Here's a chart I've already run a couple of times...

And here's the view of an actual industry expert, Tanta of Calculated Risk:

I think we can give Fannie and Freddie their due share of responsibility for the mess we're in, while acknowledging that they were nowhere near the biggest culprits in the recent credit bubble. They may finance most of the home loans in America, but most of the home loans in America aren't the problem; the problem is that very substantial slice of home loans that went outside the Fannie and Freddie box. ...

And finally, here's the verdict of a trio of real estate scholars who've been cited in this blog before... [They say] the Congressional crackdown on Fannie Mae and Freddie Mac (which came in the wake of accounting scandals...) may have been a proximate cause of the housing bubble. And John McCain says he supported the crackdown. This whole thing is his fault!

No, I don't really believe that last part. But it does play up the absurdity of McCain's charge that it's all Fannie's and Freddie's fault.

What McCain is doing is making up a story about why we are experiencing a housing crash so he can try to pin the problem on Obama. It's nothing but pure politics, and that's not needed in a crisis. He says:

We’ve heard a lot of words from Senator Obama over the course of this campaign. But maybe ... he could ... admit to his own poor judgment in contributing to these problems.

This is laughable:

Obama: McCain 'Panicked', Political Animal: .... In an odd turn, John McCain this morning blamed Barack Obama for the crisis on Wall Street, saying it was Obama's judgment that "contribut[ed] to these problems," and it was Obama who was "busy gaming the system," whatever the hell that's supposed to mean.

Soon after, Obama delivered a speech in Miami where I think he struck the right note: he accused McCain of feeling "a little panicked."

"This morning Senator McCain gave a speech in which his big solution to this worldwide economic crisis was to blame me for it," Obama said.

"This is a guy who's spent nearly three decades in Washington, and after spending the entire campaign saying I haven't been in Washington long enough, he apparently now is willing to assign me responsibility for all of Washington's failures.

"Now, I think it's a pretty clear that Senator McCain is a little panicked right now. At this point he seems to be willing to say anything or do anything or change any position or violate any principle to try and win this election, and I've got to say it's kind of sad to see. That's not the politics we need..."...

This is a serious crisis, and it demands serious leadership. George Bush has been off reading children's books or something, though he did make a brief appearance to blame short-sellers and demonstrate his own ignorance, and we don't need candidates for president playing politics with our future. John McCain likes to think he is a leader, but if this is evidence of what he means - first saying the fundamentals are strong earlier this week, which simply repeated the same old line he's been using on the campaign trail with no hint he understands the seriousness of the situation, then saying yesterday he'd fire the chair of the SEC when he doesn't have the power, as though that would solve the problem in any case, then flip-flopping today and blaming Fannie and Freddie, incorrectly, just so he could try to score a few political points.

This is not the time for scoring political points, this is a time to demonstrate leadership. John McCain is willing to lie repeatedly even after being called on it, play political games in time of crisis, and never mind the collateral damage it might cause. Country first? That's not what I'm seeing.

Let's end with this:

John McCain Is Dishonest and Dishonorable (Real Estate Lobbying Edition), Brad DeLong: Liz Wolgemuth:

McCain's Campaign Manager Was for It Before He Was Against It: ...John McCain said ... today:

The financial crisis we're living through today started with the corruption and manipulation of our home mortgage system. At the center of the problem were the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.

It seems a little bizarre then that McCain's campaign manager Rick Davis was hired—after running McCain's failed 2000 presidential campaign—to head up a group called the Homeownership Alliance, a Fannie Mae and Freddie Mac advocacy group, which the Wall Street Journal reported ... had a website creed of being dedicated to: "exposing and defeating trends that would harm consumer access to the lowest-cost mortgage option." The group viewed as threats those who are "seeking to spread unfounded fears about risks to the housing system." ...

If I seem irritated, I am. It's hard enough to deal with a crisis like this, to get everyone on the same page working toward an effective solution, without political games getting in the way. People's livelihoods are at risk. To have someone standing in the way of that to suit their own ego, especially someone who touts themselves as the bridge between factions, is anything but effective leadership. If McCain has something constructive to contribute, then let's hear it, but if he doesn't understand the problem and has nothing but political games to offer, and it appears tha tis the case, then he should just be quiet and let those who do understand and have something to contribute take center stage.

Update:

McCain on banking and health, by Paul Krugman: OK, a correspondent directs me to John McCain’s article, Better Health Care at Lower Cost for Every American, in the Sept./Oct. issue of Contingencies, the magazine of the American Academy of Actuaries. You might want to be seated before reading this.

Here’s what McCain has to say about the wonders of market-based health reform:

Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.

So McCain, who now poses as the scourge of Wall Street, was praising financial deregulation like 10 seconds ago — and promising that if we marketize health care, it will perform as well as the financial industry!

See also: I’m Tired of Playing Lying or Stupid by Ryan Avent.

Comments

[robertdfeinman]

I liken McCain to the dog chasing the bus. In his case the bus was getting the nomination for president which he has been chasing for over a decade.

Well, he finally caught the bus and, like the dog, has no idea what to do with it. The goal was the nomination, during this time he has been slimed by GWB, slimed others in turn and gotten old and forgetful. He's stuck with ideas and opinions he formulated decades ago. Focusing on politics for all this time he has not had time or inclination to learn anything new.

I think a perfect campaign slogan could be based upon the theme that one doesn't want an old man making policy for the 21st Century and not being around to see the consequences. People making policy should be young enough that they are stakeholders in the risk. If this principle holds in economics it should hold in politics as well.

[im1dc]

The Obama campaign stated that McCain's behavior shows he has cracked under the strain of the current financial crisis.

I concur.

[Nick]

The correct way to "deal" with the crisis would be to ensure that the failures of financial institutions which are necessary to purge all the risk from the system are allowed to happen in a way which does not create more risk: moral, financial, or otherwise. I totally agree that the Bush administration and the Fed have been complete failures in doing this, and I would encourage people to vote for the candidate they believe would not allow the GSE's to exist as they have, not promote more completely ineffectual "oversight", not nationalize any more losses, not bail out the speculators, not try to prop up housing prices with taxpayer money, and stop trying to "fix" the problem of government intervention with more government intervention.

There are roughly $1.5 trillion in speculative and leveraged losses in the US economy which need to be realized and paid for. The next election will determine if the people who profited from creating those losses will pay or if the American people will pay instead. Moreover, it will determine if the painful period is a short blip in American history, or a painful decade plus depression brought about by misguided socialism to appease the masses and "fix" the problems. Choose wisely.

[Andreas]

"McCain misunderstands the Fed's legal mandate. If he did, he wouldn't say that their job is to protect the dollar."

Sorry? Have a looksie at Section 2 of the Federal Reserve Act (http://www.federalreserve.gov/aboutthefed/section2a.htm), which states that the goals of the Fed and OMC are: "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."

While maintaining a strong dollar is not expressly listed, a weak dollar is not consistent with "stable prices", as the events of earlier this year should have revealed.

[Julio]

Me, I'm OK with Obama getting all the blame for the current mess.
I say, he broke it, let him fix it ;-)

McCain is making less and less sense to me...

And speaking of "irritation", the most irritating thing to me is that the polls seem to hardly budge. Probably because Obama is not offering a clear path forward. I can only hope he's keeping his powder dry, until (Nov4 - voters' attention span) i.e. some time in October.

[Mark Thoma]

Andreas:

No, McCain is wrong. There are times when the goals are inconsistent. If the Fed always did as he suggested, they would, at times, violate their legal mandate.

And it's telling that the words employment and unemployment are not mentioned anywhere in his speech, let alone when discussing the Fed's job, isn't it?

In a technical sense, the Fed no longer manages the money supply either, but most people don't know that so I left that out. He should probably know that if he understands the nuts and bolts of policy, but he doesn't seem to.

[Chuck Norris]

My feeling is that the next four years are going to be like a really bad collective hangover after the 27-year party that was kicked off with Reagonomics.

[Lexington]

@Julio,

The polls don't budge because half the electorate is composed of complete morons who think the world, which is flat, was actually created in seven days, and that whatever happens happens because God wants it to.

Except for abortion legislation. That's up to us, and overturning Roe v. Wade is our single highest calling in this life.

Understand, our education system is so effed up, that 29% of American adults only posses the the most basic levels of literacy. The largest segment - 44% - only operates at an intermediate level. Actual proficiency (like, what it would take to follow and discuss this blog, or the Wall Street Journal) is limited to only 13% of the population - a smaller segment than the 14% who simply can't read, period.

(These figures from the US Dept. of Education's National Center for Educational Statistics - http://nces.ed.gov/naal/kf_demographics.asp)

The culture war is really a war on culture, which is having to defend itself against giant great armies of Ignorance.

Abandoning a lifetime's worth of principled independence, McCain has cast is his lot in with the legions of Stupid, and is now fighting for an Idocracy that he'll be too old to run.

Instead, he'll die, and hand the reins to Sarah Palin, who has never had any principle at all, and is, if fact, a card-carrying member of the very worst and nastiest segments of the American population.

At that point, we are all, permanently fucked. Please excuse the salty language. But know that, if McCain / Palin wins, things are going to get a log uglier, and fast.

[Robinia]

Looks like McCain has not gotten around to reading Feldstein's book yet? (snark) What is sad is that so many voters are even less educated/informed and will believe it.

[donna]

The economy is the reason I support Obama. His financial advisors are far better positioned to handle this. McCain is sounding more and more stupid on the economy, doesn't even seem to know where Spain is this week, and is running attack ads that are full of lies. Not exactly honorable of him. He doesn't even seem to control his campaign, with Palin promoting the "Palin McCain adminstration" this week and he and his advisors making gaffes every time they talk. How is he going to be able to run the country?

[Lord]

McCain has been a joke. As soon as he would decry something like bailing out AIG, the administration would then do it and he would have to change his opinion. He couldn't keep up with the changing situation and now only falls back on pablum.

[Julio]

Lexington,

"The polls don't budge because half the electorate is composed of complete morons..."

OK, say that's true, what are you suggesting we do about it? Your vote = my vote = their vote.

[Julio]

Mark Thoma,

"And it's telling that the words employment and unemployment are not mentioned anywhere in his speech, let alone when discussing the Fed's job, isn't it?"

Precisely.

In your article you harp on his "ignorance". This sounds more like a policy stance. And one he should be hammered for.

[Mike]

a lifetime's worth of principled independence

Hardly. That was the image the press liked to paint, but it was never true.

[RW]

"OK, say that's true, what are you suggesting we do about it?"

Julio asks Lexington the right kind of question I think: Why have not the putatively more proficient on the progressive side been able to analyze the means or symbols requisite for communication with their less proficient fellow citizens? The right-wing seems to have solved that puzzle, is there an implicit admission they are 'smarter' here?

One possible answer is to wonder why Obama apparently decided to "come down to earth" when discussing the issues analytically rather than let his rhetoric continue to soar: Are there not sufficient numbers of surrogates including his Vice President pick to tackle that approach?

Rhetorical question: How long has it been since Americans were truly called to sacrifice, to more forward, to do something not because it was easy but because it was hard?

Remember what that felt like?

[Francois]

Lexington,
Love every word of your post!

Julio,
"OK, say that's true, what are you suggesting we do about it? Your vote = my vote = their vote."

Vote for someone who has real plans to start fixing this country. Since McCain does not seem to have one, the choice should be obvious.

[anne]

"Instead, he'll die, and hand the reins to Sarah Palin, who has never had any principle at all, and is, if fact, a card-carrying member of the very worst and nastiest segments of the American population."

Respect? There is reason for respect, but evidently women have an inordinately difficult time commanding such respect in America.

[anne]

"Please excuse the salty language."

No; I respect the Governor.

[tegwar]

this post ends with the 'Bob Rumson' (sp?) speech from 'The American President' ... 'these are series times for serious people...'

[tinbox]

Why is McCain playing politics?
Well, I'm guessing that's because there's an election in 6 weeks. The more puzzling question is why Sen. Obama (and other Dems) would act as if Sec'y Paulson and Chairman Bernanke are men of solid character, well chosen leaders that have a good plan for Americans. Why would people vote for change when Obama and the other Dems (Pelosi, Reid, Hoyer) all seem to think that this administration is hard-working and effective?
McCain is going to run against "bailing out fatcats." Obama is going to run on "there will be plenty of time to focus on moral hazard later." Bizarre.

[rufus]

tinbox says...
McCain is going to run against "bailing out fatcats."

The Keating Five
Dan Nowicki, Bill Muller
The Arizona Republic
Mar. 1, 2007 10:41 AM

http://www.azcentral.com/news/specials/
mccain/articles/0301mccainbio-chapter7.html

CHAPTER VII: THE KEATING FIVE

As a war hero and U.S. senator, John McCain has been chronicled in pictures.

There are grainy mug shots of a young McCain, printed in U.S. newspapers after his jet was shot down over North Vietnam. There are black-and-white images of his return, grinning and waving.

In happier times, there is McCain holding his newborn daughter while his wife, Cindy, smiles from her hospital bed.

But it is an innocent vacation picture that carries the reminder of the scandal that threatened his political career.

In the picture, taken in the Bahamas, McCain is seated on a bandstand while wearing an outrageous straw party hat. Next to him on the dais sits Charles Keating III, son of developer Charles H Keating Jr.

McCain calls the Keating scandal "my asterisk." Over the years, his opponents have failed to turn it into a period.

It all started in March 1987. Charles H Keating Jr., the flamboyant developer and anti-porn crusader, needed help. The government was poised to seize Lincoln Savings and Loan, a freewheeling subsidiary of Keating's American Continental Corp.

As federal auditors examined Lincoln, Keating was not content to wait and hope for the best. He had spread a lot of money around Washington, and it was time to call in his chits.

One of his first stops was Sen. Dennis DeConcini, D-Ariz.

The state's senior senator was one of Keating's most loyal friends in Congress, and for good reason. Keating had given thousands of dollars to DeConcini's campaigns. At one point, DeConcini even pushed Keating for ambassador to the Bahamas, where Keating owned a luxurious vacation home.

Now Keating had a job for DeConcini. He wanted him to organize a meeting with regulators to deliver a message: Get off Lincoln's back. Eventually, DeConcini would set up a meeting with five senators and the regulators. One of them was McCain.

McCain already knew Keating well. His ties to the home builder dated to 1981, when the two men met at a Navy League dinner where McCain spoke.

After the speech, Keating walked up to McCain and told him that he, too, was a Navy flier and that he greatly respected McCain's war record. He met McCain's wife and family. The two men became friends.

Charlie Keating always took care of his friends, especially those in politics. McCain was no exception.

In 1982, during McCain's first run for the House, Keating held a fund-raiser for him, collecting more than $11,000 from 40 employees of American Continental Corp. McCain would spend more than $550,000 to win the primary and the general election.

In 1983, as McCain contemplated his House re-election, Keating hosted a $1,000-a-plate dinner for him, even though McCain had no serious competition. When McCain pushed for the Senate in 1986, Keating was there with more than $50,000.

By 1987, McCain had received about $112,000 in political contributions from Keating and his associates.

McCain also had carried a little water for Keating in Washington. While in the House, McCain, along with a majority of representatives, co-sponsored a resolution to delay new regulations designed to curb risky investments by thrifts such as Lincoln.

Reluctant participant
Despite his history with Keating, McCain was hesitant about intervening. At that point, he had been in the Senate only three months. DeConcini wanted McCain to fly to San Francisco with him and talk to the regulators. McCain refused.

Keating would not be dissuaded.

On March 24 at 9:30 a.m., Keating went to DeConcini's office and asked him if the meeting with the regulators was on. DeConcini told Keating that McCain was nervous.

"McCain's a wimp," Keating replied, according to the book Trust Me, by Michael Binstein and Charles Bowden. "We'll go talk to him."

Keating had other business on Capitol Hill and did not reach McCain's office until 1:30. A DeConcini staffer already had told McCain about the "wimp" insult.

When he arrived, Keating presented McCain with a laundry list of demands for the regulators.

McCain told Keating that he would attend the meeting and find out whether Keating was getting treated fairly but that was all.

The first meeting, on April 2, 1987, in DeConcini's office, included Ed Gray, chairman of the Federal Home Loan Bank Board, as well as four senators: DeConcini, McCain, Alan Cranston, D-Calif., and John Glenn, D-Ohio.

(Years later, McCain recalled that DeConcini started the meeting with a reference to "our friend at Lincoln." McCain characterized it as "an unfortunate choice of words, which Gray would remember and repeat publicly many times.")

For Keating, the meeting was a bust. Gray told the senators that as head of the loan board, he worried about the big picture. He didn't have any specific information about Lincoln. Bank regulators in San Francisco would be versed in that, not him. Gray offered to set up a meeting between the senators and the San Francisco regulators.

The second meeting was April 9. The same four senators attended, along with Sen. Don Riegle, D-Mich. Also at the meeting were William Black, then deputy director of the Federal Savings and Loan Insurance Corp., James Cirona, president of the Federal Home Loan Bank of San Francisco, and Michael Patriarca, director of agency functions at the FSLIC.

In an interview with The Republic, Black said the meeting was a show of force by Keating, who wanted the senators to pressure the regulators into dropping their case against Lincoln. The thrift was in trouble for violating "direct investment" rules, which prohibited S&Ls from taking large ownership positions in various ventures.

"The Senate is a really small club, like the cliche goes," Black said. "And you really did have one-twentieth of the Senate in one room, called by one guy, who was the biggest crook in the S&L debacle."

Black said the senators could have accomplished their goal "if they had simply had us show up and see this incredible room and said, 'Hi. Charles Keating asked us to meet with you. 'Bye.'"

McCain previously had refused DeConcini's request to meet with the Lincoln auditors themselves. In Worth the Fighting For, McCain wrote that he remained "a little troubled" at the prospect, "but since the chairman of the bank board didn't seem to have a problem with the idea, maybe a discussion with the regulators wouldn't be as problematic as I had earlier thought."

McCain concedes that he failed to sense that Gray and the thrift examiners felt threatened by the senators' meddling.

'Always Hamlet'
The five senators, including McCain, seemed like a united front to Black.

"They presented themselves as a group," Black said, "and DeConcini is the dad, who's going to take the primary speaking role. Both meetings are in his office, and in both cases it's we want this, with no one going, 'What do you mean we, kemo sabe?'"

According to nearly verbatim notes taken by Black, McCain started the second meeting with a careful comment.

"One of our jobs as elected officials is to help constituents in a proper fashion," McCain said. "ACC (American Continental Corp.) is a big employer and important to the local economy. I wouldn't want any special favors for them. . . .

"I don't want any part of our conversation to be improper."

Black said the comment had the opposite effect for the regulators. It made them nervous about what might really be going on.

"McCain was the weirdest," Black said. "They were all different in their own way. McCain was always Hamlet . . . wringing his hands about what to do."

Glenn, a former astronaut and the first American to orbit the Earth, was not as tactful.

"To be blunt, you should charge them or get off their backs," he told the regulators. "If things are bad there, get to them. Their view is that they took a failing business and put it back on its feet. It's now viable and profitable. They took it off the endangered species list. Why has the exam dragged on and on and on?"

DeConcini added: "What's wrong with this if they're willing to clean up their act?"

Cirona, the banking official, told the senators that it was "very unusual" to hold a meeting to discuss a particular company.

DeConcini shot back: "It's very unusual for us to have a company that could be put out of business by its regulators."

The meeting went on. McCain was quiet. DeConcini carried the ball. The regulators told the senators that Lincoln was in trouble. The thrift, Cirona said, was a "ticking time bomb."

Then Patriarca made a stunning comment, according to transcripts released later.

"We're sending a criminal referral to the Department of Justice," he said. "Not maybe, we're sending one. This is an extraordinarily serious matter. It involves a whole range of imprudent actions. I can't tell you strongly enough how serious this is. This is not a profitable institution."

The statement made DeConcini back off a little.

"The criminality surprises me," he said. "We're not interested in discussing those issues. Our premise was that we had a viable institution concerned that it was being overregulated."

"What can we say to Lincoln?" Glenn asked.

"Nothing," Black responded, "with regard to the criminal referral. They haven't and won't be told by us that we're making one."

"You haven't told them?" Glenn asked.

"No," said Black. "Justice would skin us alive if we did. Those referrals are very confidential. We can't prosecute anyone ourselves. All we can do is refer it to Justice."

After the meeting, McCain was done with Keating.

"Again, I was troubled by the appearance of the meeting," McCain said later. "I stated I didn't want any special favors from them. I only wanted them (Lincoln Savings) to be fairly treated."

Black doesn't completely buy that argument. If McCain was concerned about Keating asking him to do things that were improper, why go to either meeting at all?

Black said McCain probably went because Keating was close to being the political godfather of Arizona and McCain still had plenty of ambition.

"Keating was incredibly powerful," Black said. "And incredibly useful."

McCain's reservations aside, Keating accomplished his goal. He had bought some time, though the price was very high.

Short-lived reprieve
A month later, the San Francisco regulators finished a yearlong audit and recommended that Lincoln be seized. But the report was virtually ignored because of politics on the bank board.

Gray was being replaced as chairman by Danny Wall, who was more sympathetic to Keating.

The audit, which described Lincoln as a thrift reeling out of control, sat on a shelf.

In September 1987, the investigation was taken away from the San Francisco office, away from Black and Patriarca. In May 1988, it was transferred to Washington, where Lincoln would get a new audit.

It was a win for Keating. A battle, not the war.

Back in San Francisco, Black was fuming.

"Clearly, we were shot in the back," he would say later.

Despite the reprieve, Keating's businesses continued to spiral downward, taking the five senators with him. Together, the five had accepted more than $300,000 in contributions from Keating, and their critics added a new term to the American lexicon: "The Keating Five."

The Keating Five became synonymous for the kind of political influence that money can buy. As the S&L failure deepened, the sheer magnitude of the losses hit the press. Billions of dollars had been squandered. The five senators were linked as the gang who shilled for an S&L bandit.

S&L "trading cards" came out. The Keating Five card showed Charles Keating holding up his hand, with a senator's head adorning each finger. McCain was on Keating's pinkie.

As the investigation dragged through 1988, McCain dodged the hardest blows. Most landed on DeConcini, who had arranged the meetings and had other close ties to Keating, including $50 million in loans from Keating to DeConcini's aides.

But McCain made a critical error.

He had adopted the blanket defense that Keating was a constituent and that he had every right to ask his senators for help. In attending the meetings, McCain said, he simply wanted to make sure that Keating was treated like any other constituent.

Keating was no ordinary constituent to McCain.

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."

The paper ran the story.

In his 2002 book, McCain confesses to "ridiculously immature behavior" during that particular interview and adds that The Republic reporters' "persistence in questioning me about the matter provoked me to rage."

"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," McCain wrote.

At a news conference after the story ran, McCain was a changed man. He stood calmly for 90 minutes and answered every question.

On the shopping center, his defense was simple. The deal did not involve him. The shares in the shopping center had been bought by a partnership set up between McCain's wife and her father. (The couple also had a prenuptial agreement that separated Cindy McCain's finances and dealings from his.)

But McCain also had to explain his trips with Keating and why he didn't pay Keating back right away.

On that score, McCain admitted he had fouled up. He said he should have reimbursed Keating immediately, not waited several years. His staff said it was an oversight, but it looked bad, McCain jetting around with Keating, then going to bat for him with the federal regulators.

"I was in a hell of a mess," McCain later would write.

Meanwhile, Lincoln continued to founder.

In April 1989, two years after the Keating Five meetings, the government seized Lincoln, which declared bankruptcy. In September 1990, Keating was booked into Los Angeles County Jail, charged with 42 counts of fraud. His bond was set at $5 million.

During Keating's trial, the prosecution produced a parade of elderly investors who had lost their life's savings by investing in American Continental junk bonds.

Verdict: 'Poor judgment'
In November 1990, the Senate Ethics Committee convened to decide what punishment, if any, should be doled out to the Keating Five.

Robert Bennett, who would later represent President Bill Clinton in the Paula Jones case, was the special counsel for the committee. In his opening remarks, he slammed DeConcini but went lightly on McCain, the lone Republican ensnared with four Democrats.

"In the case of Senator McCain, there is very substantial evidence that he thought he had an understanding with Senator DeConcini's office that certain matters would not be gone into at the meeting with (bank board) Chairman (Ed) Gray," Bennett said.

"Moreover, there is substantial evidence that, as a result of Senator McCain's refusal to do certain things, he had a fallout with Mr. Keating."

Among the Keating Five, McCain took the most direct contributions from Keating. But the investigation found that he was the least culpable, along with Glenn. McCain attended the meetings but did nothing afterward to stop Lincoln's death spiral.

Lincoln was the most expensive failure in the national S&L scandal. Taxpayers lost more than $2 billion on the bailout. McCain also looked good in contrast to DeConcini, who continued to defend Keating until fall 1989, when federal regulators filed a $1.1 billion civil racketeering and fraud suit against Keating, accusing him of siphoning Lincoln's deposits to his family and into political campaigns.

In January 1993, a federal jury convicted him of 73 counts of wire and bankruptcy fraud in the collapse of American Continental and Lincoln. Keating was sentenced to 12 years and seven months in prison but served just 50 months before the conviction was overturned on a technicality. In 1999, at age 75, he pleaded guilty to four counts of fraud. He was sentenced to time served.

In the end, McCain received only a mild rebuke from the Ethics Committee for exercising "poor judgment" for intervening with the federal regulators on behalf of Keating. Still, he felt tarred by the affair.

"The appearance of it was wrong," McCain said. "It's a wrong appearance when a group of senators appear in a meeting with a group of regulators because it conveys the impression of undue and improper influence. And it was the wrong thing to do."

McCain noted that Bennett, the independent counsel, recommended that McCain and Glenn be dropped from the investigation.

"For the first time in history, the Ethics Committee overruled the recommendation of the independent counsel," McCain said. For his part, DeConcini is critical of McCain's role in the affair. The two senators never were particularly cozy, and the stress of the public scrutiny worsened their relations.

In his memoir Senator Dennis DeConcini: From the Center of the Aisle, he praises the decision to keep McCain on the hook.

"It became clear to me, and it was later confirmed by Ethics Committee members, that Bennett was attempting to dismiss the charges against McCain, and in order to appear nonpartisan, he included Glenn in this effort," DeConcini wrote with co-author Jack August. "Thanks to the three Democrats on the committee and perhaps with the help of Senator (Jesse) Helms (R-N.C.), however, the charges remained in place for all the senators under investigation. So all of us had to attend the 23-day public hearing, which was indeed a trial, before the six-member Senate Ethics Committee."

In the book, DeConcini reiterates his allegation that McCain leaked to the media "sensitive information" about certain closed proceedings in order to hurt DeConcini, Riegle and Cranston. It's a fairly serious charge. The Boston Globe revisited the Keating Five leaks in 2000. The story paraphrased a congressional investigator, Clark B. Hall, as personally concluding that "McCain was one of the principal leakers." The newspaper also reported that McCain, under oath, had denied involvement with the leaks.

McCain owns up to his mistake this way:

"I was judged eventually, after three years, of using, quote, poor judgment, and I agree with that assessment."

[rufus]

tinbox says...
McCain is going to run against "bailing out fatcats."

The Keating Five
Dan Nowicki, Bill Muller
The Arizona Republic
Mar. 1, 2007

http://www.azcentral.com/news/specials/
mccain/articles/0301mccainbio-chapter7.html

[OhNoNotAgain]

"Respect? There is reason for respect, but evidently women have an inordinately difficult time commanding such respect in America."

Give it a rest, Anne. Palin doesn't automatically get respect because she has a uterus, just like I don't automatically get respect just because I have a penis. This election is playing host to some of the most vile and cynical identity politics regarding women that I've ever seen.

And Nick, the candidate that you want doesn't exist because none of the options that you propose are actually options at this point. We're past the point of no return here, and so your ideology gets to take a back seat to practicality. Job number one is preventing a complete meltdown, and I suspect that Obama understands this in a way that McCain or Bush never will.

[Juanita de Talmas]

I respect the Governor.

You respect pathological liars?

http://www.adn.com/sarah-palin/story/515517.html

[anne]

"You respect pathological liars?"

This comment speaks for itself more powerfully than I could ever speak in defense of a woman. I respect the Governor of Alaska.

[anne]

"Give it a rest, Anne. Palin doesn't automatically get respect because she has a uterus...."

I respect the Governor of Alaska; interesting though the way in which the attack is framed.

[Icarus]

Anne respect the governor of alaska, despite her lack of qualifications and utter disregard for progressive politics. Why?

And, if Palin is elected, would you 'respect' her policies and attitude?

Respect is no longer a very respected word, it seems.

[anne]

"Anne respect the Governor of Alaska, despite her lack of qualifications and utter disregard for progressive politics. Why?"

Simply notice the wording, and understand what it is to bully and intimidate. I respect the Governor of Alaska.

[burbed]

Dont think this is just McCain playing this game. Both candidates are treating this as a chance to score political points, yet its clear NEITHER one of them has any idea what we are up against.

All week long, all I have heard is a bunch of populist rhetoric on "Greed" and "Fat Cats"...what a bunch of nonsense. They totally underestimate the seriousness of the problem - as does most of congress who sat in stunned silence this week as Bernanke and Paulson explained we were perhaps days away from a complete financial meltdown.

Where are McCain & Obama on the specifics? What sort of markdown period do they want for the RTC purchased assets? What, if anything do they plan to do about the restriction of short sales. Do either of them have any fucking idea how serious this is? Does anybody?

[SanFranciscoJim]

And speaking of "irritation", the most irritating thing to me is that the polls seem to hardly budge.

In the Gallup tracking poll, McCain has gone from being five points up to five points down in two short weeks. That is a pretty big move this close to the election.

40% on each side has their minds made up, you just need to take that as a given, so the election is decided by the 20% that either has not made up its mind yet, or is just stating to pay attention. And half of them have switched from Obama to McCain and back in the last month.

[NC]

Mr. McCain and Mr. Obama parallel almost exactly the "Hi I'm a Mac/PC" ad campaign of Apple.

Mr. McCain clearly continues to misdiagnose the problem and doesn't know it and is flustered and driven to nonsensical solutions. To the informed viewer, his actions are equivalent to the bumbling and inefficient "PC" hiding in a "free pizza" box begging for acceptance.

[Icarus]

Let us keep in mind that this McCain thought Iraq bordered Pakistan, and admitted not knowing much about the economy. Then, he selects a candidate so underqualified for government, it reminds us of Dan Quayle.

Lucky for their campaign, we have a nation which cares about Guns, Creationism, shallow Patriotism, and the appearance of national strength.

Glad Anne respects this Palin. What a comfort.

[anne]

"Glad Anne respects this Palin. What a comfort."

Remember, what is important, always important is to pound and pound and pound, as though with a club in an alley which is what would happen evidently were that possible. Remember, women must be bullied and intimidated and worse if possible.

Please do continue, please continue the pounding, please continue the bullying and intimidation so that we understand what this is about.

[anne]

Imagine a woman who is capable enough to become on her own the Governor of a state, the wildly popular Governor of a state, the first woman to become governor in the state's history, but who must be subject to such vilification for being a woman.

says...

Icarus, "Lucky for their campaign, we have a nation which cares about Guns, Creationism, shallow Patriotism, and the appearance of national strength.

Glad Anne respects this Palin. What a comfort."

anne, "Remember, what is important, always important is to pound and pound and pound, as though with a club in an alley which is what would happen evidently were that possible. Remember, women must be bullied and intimidated and worse if possible.

Please do continue, please continue the pounding, please continue the bullying and intimidation so that we understand what this is about."
__________
"Let me never fall into the vulgar mistake of dreaming that I am persecuted whenever I am contradicted."
-Ralph Waldo Emerson

[anne]

Remember, what is important, all that is important, is to continue the bullying and intimidation. Please do continue, for that shows just what this is about. No contradiction, just intense meanness, bullying and intimidation. Please continue. Interesting, how bullies come on.

[anne]

"Then, he selects a candidate so underqualified for government...."

Please do continue the belittling of the Governor of Alaska, the first woman Governor in the history of the state, a wildly popular Governor at that, but the barrage of insults of a woman may even tell in time as they have so often.

[bakho]

Palin and her accomplishments should be given its due. However, Palin does herself no favors and earns no respect when she comes up with doozies like this:

Gov. Sarah Palin said,
"The fact is that Fannie Mae and Freddie Mac have gotten too big and too expensive to the taxpayers. The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help."

Where to begin? Obviously, a governor cannot know everything, but Gov Palin must not be getting very good economic advice or information.

[anne]

That is entirely fair criticism, but I wonder if the push to have Fannie Mae and Freddie Mac increasingly buy mortgages allowed for turning aside from the quality of the mortgages they were buying. I am still puzzled about what made Warren Buffett sell Freddie Mac much before a mortgage problem was being discussed at least openly. Could Buffett have understood there was a decline in portfolio credit quality? I sort of thought the problem was the artificial smoothing of revenues, but I never liked that answer.

Buffett never explains a sale, but Buffett knows asset safety and that may have been the problem. I immediately turned from Fannie and Freddie when Buffett announced the sale.

says...

"anne says...
Remember, what is important, all that is important, is to continue the bullying and intimidation. Please do continue, for that shows just what this is about. No contradiction, just intense meanness, bullying and intimidation. Please continue. Interesting, how bullies come on."

'All conservatives are such from personal defects. They have been effeminated by position or nature, born halt and blind, through luxury of their parents, and can only, like invalids, act on the defensive.'
-Ralph Waldo Emerson

[anne]

"All conservatives are such from personal defects. They have been effeminated by position or nature, born halt and blind, through luxury of their parents, and can only, like invalids, act on the defensive."

Interestingly enough, this is a tautology and meaningless. Though the use of the term effeminated shows us something of the tenor of the times. I really do like Emerson a lot, though.

Please if possible reference the Emerson, and I appreciate this passage even with the criticism (the other as well). I will look to the context when there is a reference, or I will find a reference.

says...

http://www.rwe.org/works/Conduct_1_Fate.htm
Fate
from The Conduct of Life (1860, rev. 1876)
by
Ralph Waldo Emerson

says...

To me criticism is much like intimidation and dependent on the recipient. Whatever the author’s intent, the audience will not receive it as such if they so choose.

[anne]

http://ebooks.adelaide.edu.au/e/emerson/ralph_waldo/e53c/part1.html

1860

The Conduct of Life
By Ralph Waldo Emerson

A good deal of our politics is physiological. Now and then, a man of wealth in the heyday of youth adopts the tenet of broadest freedom. In England, there is always some man of wealth and large connection planting himself, during all his years of health, on the side of progress, who, as soon as he begins to die, checks his forward play, calls in his troops, and becomes conservative. All conservatives are such from personal defects. They have been effeminated by position or nature, born halt and blind, through luxury of their parents, and can only, like invalids, act on the defensive. But strong natures, backwoodsmen, New Hampshire giants, Napoleons, Burkes, Broughams, Websters, Kossuths, are inevitable patriots, until their life ebbs, and their defects and gout, palsy and money, warp them....

[Thanks much, still tautological though. I will read the essay.]

says...

"Interestingly enough, this is a tautology and meaningless."

I don't know that I agree, when one reads Emerson much of what he writes might appear 'tautological', and therefore needs to be considered in context as you suggest. I think the reader has to ask is this redundant or restatement. Where do you see the redundancy, if you don't mind expanding on this?

An scathing essay on Emerson's view of conservatism can be found here:
http://www.rwe.org/works/
Nature_lectures_3_The_Conservative.htm
The Conservative
from Lectures, published as part of Nature; Addresses and Lectures
by
Ralph Waldo Emerson
A Lecture delivered at the Masonic Temple,
Boston, December 9, 1841

[anne]

Nice; I will read later the essay and criticism carefully and from a friendly perspective. I always am friendly to Emerson, but further context would seem to be needed needed for the passage.

[Icarus]

So, beyond the shallow respect we can have for any person, whatever their achievement is, it is clear that Palin is not qualified to serve as 2nd in command. She neither has the experience, or the global perspective to understand the issues she'd have to command.

This is McCain's fault, and he has repeatedly shown an inability to grasp the complexity of the path he is pursuing. We have another George Bush here, a man eager to declare victory, and announce that 'we are the best nation...yada yada', and all sorts of other shallow diatribes.

In the name of utter shallowness, he fould a VP candidate which has 'shallow' written on her forehead.

I only hope Tina Fey began digging her grave with her poignant mimicry.

[bakho]

Buffett said he bought stock in Freddie Mac in the 1980s because "it looked ridiculously cheap." He said his company became one of Freddie Mac's largest shareholders before it began liquidating its stake in the late 1990s at an eventual profit of about $2.75 billion.

Buffet said he became troubled when Freddie Mac made an investment unrelated to its mission. He wasn't clear on the specifics but said he "didn't think that made any sense at all" and "was concerned about what they might be doing . . . that I didn't know about."

This was from his court testimony.
http://www.washingtonpost.com/wp-dyn/content/article/2007/10/30/AR2007103002292.html

When a business promises double digit returns by expanding beyond its core, it is time to ask questions. A simple but sound rule. Many CEOs only understand finance and are clueless about the technical aspects. When a CEO charts a new course, does his corporate tekkies have the ability to back him up? Buffett obviously thought no. I have heard horror stories of CEOs pronouncing to R&D that "R&D is going to come up with 10 new products in the next year." Yes, many MBAs are that clueless. MBA cluelessness has had maximum exposure with GW Bush, MBA.

[j]

anne, i was born in iran, i'm 25. have lived here since i was like 5. now.. in all seriousness, i respect woman a lot, especially my mom. i think all of us do, none of us are trying to bad mouth Palin and I can't wait till the day comes where we have a real woman candidate. the point is that most american's who have switched to mccain and palin is because of palin and there isn't a reason that they should because she has nothing, she knows nothing.. she is underqualified i'm sorry to say, i'm too tired to write but i've written in my school's articles and all that wonderful stuff in the past at USC but now i'm too lazy, i'm getting annoyed at writing and talking to people who just want to vote for her cause she's a woman. i'm glad she's the governor but maybe she should stay the governor.. all she does is read lies that are written for her, it's embarassing and it's embarassing that there's a country full of people who want to vote for her.

and i'm tired of people who dont mind a war with russia, we can't even win and iraq.. dont talk about a surge, in order to destroy russia, they'd have to get nuked on the spot without time to react.. and what would that lead to? everyone else in that region.. including all the asian countries to attack the u.s. because you've DESTROYED the region. you'd need a LOT of nukes to take down russia. all that nuclear fall out will eventually harm that region but a war with russia would definitely end the world. so palin needs to shut up about russia already.