# Keating Five Scandal The **Keating Five Scandal** was a congressional-ethics affair in which five U.S. Senators — [[Alan Cranston]] (D-CA), [[Dennis DeConcini]] (D-AZ), [[John Glenn]] (D-OH), [[John McCain]] (R-AZ), and [[Donald Riegle]] (D-MI) — were accused of improperly pressuring federal regulators on behalf of [[Charles Keating]], the chairman of [[Lincoln Savings and Loan Association]]. Keating had funneled roughly $1.3 million to the five senators' campaigns and political causes. The episode became one of the emblematic corruption stories of the broader [[Savings and Loan Crisis]] and a case study in how campaign money can shade into [[Regulatory Capture]]. ## Background Charles Keating's American Continental Corporation acquired Lincoln Savings and Loan in 1984 and, taking advantage of thrift-industry deregulation, poured federally insured deposits into high-risk direct investments — land, junk bonds, and speculative real estate — rather than conventional home loans. The [[Federal Home Loan Bank Board]] (FHLBB), the thrift regulator then chaired by Edwin J. Gray, moved to restrict exactly this kind of high-risk activity. Keating fought back on every front: he commissioned a study from the private economist [[Alan Greenspan]] arguing that direct investments were not dangerous, secured a Reagan recess appointment of an ally to the FHLBB, and mobilized the senators whose campaigns he had funded. ## The 1987 meetings The core of the scandal was two meetings in April 1987. On April 2 and April 9, groups of the senators met with federal regulators — including FHLBB chairman Ed Gray and the San Francisco examiners handling Lincoln — to press Keating's complaints and question why his thrift was being investigated. Riegle helped set the meetings in motion; DeConcini did much of the organizing. The senators pointedly excluded staff aides. Regulators later described the pressure as extraordinary, and Lincoln's examination was effectively delayed. When Lincoln finally collapsed in 1989, it became one of the most expensive thrift failures of the era: the bailout cost taxpayers over $3 billion, and thousands of small investors — many elderly — lost their savings on uninsured American Continental bonds sold through Lincoln branches. ## The five senators and their contributions | Senator | State / Party | Keating-linked money | Committee outcome | |---|---|---|---| | [[Alan Cranston]] | California / D | ~$850,000 (voter-registration groups) | Formally **reprimanded** | | [[Dennis DeConcini]] | Arizona / D | ~$85,000 | Criticized; "substantially interfered" | | [[Donald Riegle]] | Michigan / D | ~$76,000 | Criticized; "substantially interfered" | | [[John Glenn]] | Ohio / D | ~$34,000 | Cleared; "poor judgment" | | [[John McCain]] | Arizona / R | ~$112,000 | Cleared; "poor judgment" | ## The investigation The [[Senate Select Committee on Ethics]] opened its investigation on November 17, 1989. Led by special counsel Robert S. Bennett, the inquiry ran fourteen months and included 22 days of public hearings in late 1990. Bennett recommended dropping Glenn and McCain from the case for lack of substantial evidence, but the committee kept all five in the proceedings. ## Findings and outcomes In late February 1991 the committee concluded that Cranston, DeConcini, and Riegle had "substantially and improperly interfered" with the FHLBB's regulation of Lincoln. Glenn and McCain were cleared of acting improperly but were criticized for "poor judgment." In November 1991 the committee voted unanimously to formally **reprimand** Cranston — the harshest sanction imposed on any of the five, though short of the censure by the full Senate that had been under consideration. Cranston, already ill and facing the fallout, did not seek re-election. ## Significance The Keating Five became shorthand for the way legal campaign contributions can buy access and pressure regulators — the soft edge of corruption that ethics rules struggle to reach. For [[John McCain]], the near-miss was formative: he spent much of the rest of his career championing campaign-finance reform, culminating in the McCain–Feingold Act of 2002. More broadly, the scandal fused two lasting themes tracked in this vault — the deregulatory disaster of the [[Savings and Loan Crisis]] and the dynamics of [[Regulatory Capture]] — into a single, memorable case of elite accountability tested and only partly enforced. ## Sources - [Keating Five — Wikipedia](https://en.wikipedia.org/wiki/Keating_Five) - [Ethics Panel Hears 'Keating 5' Charges — The Washington Post (1990)](https://www.washingtonpost.com/archive/politics/1990/11/16/ethics-panel-hears-keating-5-charges/6b9fd86a-a1eb-411e-b8dd-f94335abbc47/) - [The Keating Five — TIME](https://time.com/archive/6904639/the-keating-five/) - [Five Senators Involved in the Keating Affair — Pima County Public Library](https://www.library.pima.gov/content/five-senators-involved-in-the-keating-affair/)