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For a second day in a row, Barack Obama has added references to the 1980s savings and loan scandal as a way of highlighting why John McCain isn't capable of addressing the crisis in financial markets. That Mr. McCain was embroiled in the S&L meltdown as a player in the "Keating Five" scandal is well known to Obama aides.
"When we loosened restrictions on savings and loans and appointed regulators who ignored even these weaker rules, too many S&Ls took advantage of the lax rules set by Washington to gamble that they could make big money in speculative real estate," Mr. Obama told audiences yesterday.
"When we loosened restrictions on savings and loans and appointed regulators who ignored even these weaker rules, too many S&Ls took advantage of the lax rules set by Washington to gamble that they could make big money in speculative real estate," Mr. Obama told audiences yesterday.
"Confident of their clout in Washington, they made hundreds of billions in bad loans, knowing that if they lost money, the government would bail them out. And they were right. The gambles did not pay off, our economy went into recession, and the taxpayers ended up footing the bill. Does that sound familiar?"
Mr. Obama went on to say Mr. McCain's new support for regulation should be contrasted with his "scornful attitude towards oversight and enforcement. . . . John McCain has shown time and again that he doesn't believe" in regulation.
While he didn't specifically tie Mr. McCain to the Keating Five scandal, you can bet other Democrats and outside groups will.
While he didn't specifically tie Mr. McCain to the Keating Five scandal, you can bet other Democrats and outside groups will.
In the late 1980s, Mr. McCain was linked with four other senators who met with federal banking regulators in an effort to aid financier Charles Keating, a major campaign contributor. Mr. Keating's S&L empire later collapsed and he spent time in prison.
The scandal ended the careers of Democratic Senators Alan Cranston, Don Riegle and Dennis DeConcini. Two others, Democrat John Glenn and Mr. McCain, were judged less culpable and won re-election. Mr. McCain was found to have used "poor judgment" by the Senate Ethics Committee, and the experience launched his efforts to reform the campaign finance laws that ultimately became the McCain-Feingold law.
The scandal ended the careers of Democratic Senators Alan Cranston, Don Riegle and Dennis DeConcini. Two others, Democrat John Glenn and Mr. McCain, were judged less culpable and won re-election. Mr. McCain was found to have used "poor judgment" by the Senate Ethics Committee, and the experience launched his efforts to reform the campaign finance laws that ultimately became the McCain-Feingold law.
While his allies will no doubt bring up the Keating Five scandal, Mr. Obama is likely to remain above the fray on that issue.
Obama has his own vulnerabilities, having received $9.9 million in contributions from the financial services industry. He is also the third-largest recipient of political contributions from the home mortgage giant Fannie Mae, which was recently taken over by the government.
-- John Fund
[The Wall Street Journal POLITICAL DIARY ONLINE]
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