John McCain and the Making of a Financial Crisis

This weekend was a pretty disgusting weekend in the McCain campaign, with Sarah Palin accusing Obama of "palling around with terrorists," citing a New York Times article that did not corroborate this part of her argument, oddly enough. Essentially the meme, if you will, is that Obama is being judged by the company that he keeps; that he is guilty by association.

If they want go there, then I suggest you look at this list that Steve Benen (formerly of The Carpetbagger Report and now Political Animal at the Washington Monthly) has compiled of McCain's nefarious relationships, for your information.

Just saying.

And let's not forget that McCain was directly involved in the whole Savings & Loan debacle of the late 80s:

Once upon a time, a politician took campaign contributions and favors from a friendly constituent who happened to run a savings and loan association. The contributions were generous: They came to about $200,000 in today's dollars, and on top of that there were several free vacations for the politician and his family, along with private jet trips and other perks. The politician voted repeatedly against congressional efforts to tighten regulation of S&Ls, and in 1987, when he learned that his constituent's S&L was the target of a federal investigation, he met with regulators in an effort to get them to back off.

That politician was John McCain, and his generous friend was Charles Keating, head of Lincoln Savings & Loan. While he was courting McCain and other senators and urging them to oppose tougher regulation of S&Ls, Keating was also investing his depositors' federally insured savings in risky ventures. When those lost money, Keating tried to hide the losses from regulators by inducing his customers to switch from insured accounts to uninsured (and worthless) bonds issued by Lincoln's near-bankrupt parent company. In 1989, it went belly up -- and more than 20,000 Lincoln customers saw their savings vanish.

Keating went to prison, and McCain's Senate career almost ended. Together with the rest of the so-called Keating Five -- Sens. Alan Cranston (D-Calif.), John Glenn (D-Ohio), Don Riegle (D-Mich.) and Dennis DeConcini (D-Ariz.), all of whom had also accepted large donations from Keating and intervened on his behalf -- McCain was investigated by the Senate Ethics Committee and ultimately reprimanded for "poor judgment."

But the savings and loan crisis mushroomed. Eventually, the government spent about $125 billion in taxpayer dollars to bail out hundreds of failed S&Ls that, like Keating's, fell victim to a combination of private-sector greed and the "poor judgment" of politicians like McCain.

The $125 billion seems like small change compared to the $700-billion price tag for the Bush administration's proposed Wall Street bailout. But the root causes of both crises are the same: a lethal mix of deregulation and greed.

As a result of his involvement, McCain was formally reprimanded by the Senate Ethics Committee for being guilty of public misconduct.

The point here, as Steve says, is that we could go all day playing, "Who knows more shitty people," but with the election coming up in less than a month, I'm more interested in knowing what the candidates can do for me. Are you going to make the streets safer? Are you going to fix the economy? If I want to buy a house next year, will it be impossible for me to get a mortgage?

I've had to sit through eight years of fearmongering, idiocy, and intellectual vacuousness. It's time to get down to brass tacks and fix this country.

The Obama campaign launched a short documentary today on John "Keating Five" McCain at KeatingEconomics.com. Take a few minutes to watch it.