Way back in 1988 my co-authors and I were putting the final touches to our book, Inside Job: The Looting of America's Savings and Loans when someone slipped us a plain brown envelop. Inside was a transcript of a meeting between thrift regulators and five US senators who had interceded on behalf of Arizona S&L owner Charles Keating. At the time the regulators were warning that Keating's thrift, Lincoln Savings and Loan, was dangerously insolvent and that Keating and his cohorts -- including then junk bond king, Mike Milken, were robbing the federally-insured thrift blind -- or, more precisely, robbing the US taxpayers blind.
Keating had been generous in sharing his new-found wealth with the five senators, particularly his two Arizona senators, John McCain and Dennis DeConcini. They became known as "The Keating Five."
Alarmed by such high-powered political arm twisting, FHLBB attorney, William Black, decided to document the meeting. He claims to this day that he did not secretly record the five senators. But over the years I've read countless transcripts and I remain certain that the following is a transcription taken off an actual recording.
Of course, once authenticating the transcript we wasted no time including it in the appendix of our book. The disclosure of the meeting and verbatim remarks by each senator caused them no end of misery. One would have thought McCain especially had learned his lesson about messing with the work of federal regulators. And it appeared he had. But then comes the revelation that he once again chummed up to an industry group -- this time telecom -- and inserted himself into the regulatory process in ways that look distressingly similar to the Keating affair.
The Keating affair was about money and influence, not sex. This new revelation may or may not have sex in it -- but fankly, I couldn't care less. I don't lay awake at night worrying if my senator is getting laid by the wrong people, I worry if they are getting paid by the wrong people.
In the case of Charles Keating that money and influence, and the delays caused by political pimping by people like McCain, cost American small shareholders and taxpayers dearly:
Much has been made of the $2 billion that it will cost taxpayers to bail out Charles H. Keating Jr.'s Lincoln Savings and Loan Association. But for the people who were persuaded to invest their life savings in now-worthless securities, the cost is emotional as well as financial. (NYT- 1989)
Anyway, how often have you wished you could be a fly on the wall at one of these closed-door sit downs? Well, here's a rare glimpse at one, up close and personal.
"This meeting is very unusual... to discuss a particular company."
(Chairman, James Cirona, Federal Home Loan Bank, San Francisco, 1987)
Memo
From: William Black, Esq. To: Chairman, FHLBB, Edwin Gray
April 9, 1987
Meeting of FHLB-SF Personnel with: Senators Cranston, DeConcini, Glenn, McCain and Riegle
At your request I am providing you this memorandum, which reflects the substance of yesterday’s meeting with Senators Cranston, DeConcini, Glenn, McCain and Riegle. The Federal Home Loan Bank of San Francisco (FHLB-SF) personnel who attended the meeting were James Cirona (President and Principal Supervisory Agent), Michael Patriarca (Director of Agency Functions), myself (general counsel) and Richard Sanchez (the Supervisory Agent for Lincoln Savings Assoc. of Irvine, Calif.).
The meeting commenced at 6:00 P.M. and ended at approximately 8:15 a.m., with two breaks of approximately 15 and 10 minutes during which time the Senators voted. Senator Cranston was present only very briefly, because of his responsibilities on the Senate floor. The other Senators were present for substantially the entire meeting.
This meeting was the product of an earlier meeting among yourself and Senators Cranston, DeConcini, Glenn and McCain. At that meeting, as related by you (and by these same Senators in yesterday’s meeting) each of the Senators raised their concerns regarding the examination of Lincoln by the FHLB-SF and you noted your unfamiliarity with any specifics of the examination, your confidence in the FHLB-SF and your suggestion that the Senators hear from the FHLB-SF our supervisory concerns regarding Lincoln.
I was the only one at the April 9 meeting who took notes. While not verbatim, my notes are very extensive. At your request, I called you last night and read these notes to you. I have attached a copy of those notes to this memorandum. I have used these notes and my independent recall of the meeting to prepare this memorandum and provide the fullest possible record of the discussions at yesterday’s meeting.
I have circulated this memorandum to Messrs. Cirona, Patriarca and Sanchez for their review to ensure the accuracy of this memorandum. I believe that his memorandum is an accurate and complete record of the substance of yesterday’s meeting.
The Transcript
CIRONA: I am Jim Cirona. I am president of the Federal Home Loan Bank of San Francisco. I have held that position for four years. I am here in my capacity as principal supervisory agent. We have jurisdiction over California, Arizona and Nevada savings and loans. Before becoming president I was in the industry for 20 years.
Stephen Pizzo has been published everywhere from The New York Times to Mother Jones magazine. His book, Inside Job: The Looting of America's Savings and Loans, was nominated for a Pulitzer.
Why is it, whenever the "Keating Five" are mentioned, the fact that Neil Bush was a paid director of the Savings & Loan, and approved the $132 million in loans from Silverado to Bill Walters and Kenneth Good, is never mentioned. He received $550,000 in salaries from the company funded by Walters and Good, plus a $100,000 loan from Good that was subsequently forgiven. This was all hushed up until G.W. Bush's presidential campaign was successfully culminated. The "Five", in case you've forgotten, were Alan Cranston, Dennis DeConcini, John Glenn, Donald Riegle and JOHN McCAIN
by
lucydavis (0 articles, 0 quicklinks, 0 diaries, 90 comments)
on Friday, February 22, 2008 at 10:45:41 AM
The Keating Five/Lincoln S&L and Silverado/Neil Bush were two different cases entirely. Same variety of crookery tho. For a good overview of that case see"
You might want to check your facts a bit on that White House furniture thing a little bit. I am not going to waste my time refuting something proved false over six years ago, but either the OMB or the Auditor General did a thorough accounting of White House furnishings and alleged vandalism after the Bushies made those allegations and found no basis to the charges. As to your other claims, the Republicans had six years and a willing, highly funded special prosecutor to prove any of them, and the best he could do was unearth a minor sexual escapade unworthy of any mention in any other time than ours. The Clintons are the most investigated people on the planet Earth, and your claims at this late date are absurd. Not that I like the Clintons, because I do not. NAFTA sold this nation out.
by
W.M.L. (0 articles, 0 quicklinks, 0 diaries, 256 comments)
on Friday, February 22, 2008 at 5:10:09 PM
Deadender conservatives have fed off this kind of nonsense for nearly 14 years now, beginning with Gingrich et al. When their own misconduct/mistakes/mismanagement/corruption become known they resort to "look over there, not over here" and "they're even worse" tactics.
Hopefully come Jan 2009 they and their bankrupt ideologies will join Communism on the trash heap of history -- where it so richly deserves to be. And with it the knuckle-dragging intellects of folks like this guy.
Steve
by
Stephen Pizzo (77 articles, 0 quicklinks, 1 diaries, 22 comments)
on Friday, February 22, 2008 at 5:15:54 PM
