Reply #8: (AP) McCain: I learned from Keating Five case

[DrFunkenstein]

WASHINGTON - Sen. John McCain's ethics entanglement with a wealthy banker ultimately convicted of swindling investors was such a disturbing, formative experience in his political career that he compares the scandal in some ways to the five years he was tortured as a prisoner of war in Vietnam.

In his early days as a freshman senator, McCain was known for accepting contributions from Charles Keating Jr., flying to the banker's home in the Bahamas on company planes and taking up Keating's cause with U.S. financial regulators as they investigated him.

Keating and his associates raised $1.3 million combined for the campaigns and political causes of all five. McCain's campaigns received $112,000.

The investigation ended in early 1991 with a rebuke that McCain "exercised poor judgment in intervening with the regulators." But the Senate ethics committee also determined McCain's actions "were not improper nor attended with gross negligence."

McCain has claimed the Keating scandal sensitized him even to the appearance of potential conflicts of interest. But in recent weeks, McCain has defended himself anew over another instance in which he intervened with federal regulators on behalf of a prominent campaign contributor — years ago but after the Keating rebuke. Again, McCain denies acting improperly.

Now famously accessible to reporters as a presidential candidate, McCain conducted a poisonous newspaper interview nearly 20 years ago with his hometown Arizona Republic. Flashing his quick temper, he insulted, cursed and hung up on reporters questioning him about his ties to Keating. He said he now recognizes it was the worst way to respond.

"Taking all the questions and making your arguments is the only way you can prevent an unfair or injurious public perception becoming fixed," McCain said.

....

Keating sought a quid pro quo from the five. He wanted government regulators, who were investigating Lincoln, off his back. And he demanded reversal of a new rule limiting an S&L's direct investment in risky ventures to 10 percent of assets.

The banker's attitude was summed up the day a reporter asked whether his political donations to the senators encouraged their intervention.

"I want to say in the most forceful way I can, I certainly hope so," Keating replied.

But McCain had an additional image problem beyond the intervention and his acceptance of Keating's cash. The two former Navy pilots had become good friends, until the day Keating decided McCain wasn't doing enough for him and called the Arizona senator a wimp. Keating had flown McCain and his family on several occasions to his home in the Bahamas and other locations.

When his company tried to take tax deductions for the trips, the IRS raised questions. McCain, who said he mistakenly thought his wife had reimbursed the cost, paid back more than $13,000 — years after the trips and after the senator knew of Keating's problems with the government.

McCain, in his book "Worth the Fighting For," lamented that the senators "were now a two-word shorthand for the entire savings and loan debacle and the rotten way American political campaigns are financed."

http://news.yahoo.com/s/ap/20080323/ap_on_el_pr/mccain_keating_4