McCain and the Robber Bankers

Around this time four years ago, the then-Democratic candidate John Kerry was the target of the Republican smear campaign, Swift Boat Veterans for Truth. That hired action group then planted questions about John Kerry’s past in Vietnam. An incredulous Kerry did not strike back, and that reinforced his image of a soft, French-speaking, windsurfing, East Coast politician.

The McCain campaign announced this weekend that during the last weeks before the elections “the gloves come off.” Palin dealt the first blow with her accusation that Obama pals around with terrorists. But Obama made it immediately clear that he is not going to take such personal attacks lying down. In a documentary released on Monday, McCain’s guilt-by-association allegations come back to him like a boomerang.

Because, as it turns out, McCain was deeply implicated in a previous financial crisis (deregulated robber bankers get into such a fix every ten years or so). It was the Savings and Loans scandal in the late 80s, when irresponsible and fraudulent speculation with savings deposits eventually led to a government bailout that amounted to $160 billion–which looks like a bargain today.

One of the instances in question was the Lincoln Savings and Loans Association, led by Charles H. Keating. Keating, an important donor to Congressman John McCain, among others, was eventually sentenced to ten years in prison for fraud and swindle. McCain was one of the “Keating Five”, five Congressmen who allowed themselves to be paid for lobbying for de-regulation and for less oversight. A Senate commission heard their case.

McCain came away with a reprimand for “poor judgment.” As expected, he showed remorse later, and legend has it that because of this affair, McCain has become the anti-lobbying maverick he now claims to be.

But according to the mini-documentary, the present crisis looks an awful lot like the S&L scandal. And just as he did at the time on behalf of Keating, McCain has proven in the years following the scandal to be a fervent advocate of financial deregulation–regarded by many as one of the causes of the current economic slump.

The question is whether that argument holds, but in a good mud fight, it really does not matter. Obama has made it clear that he is not going to sit by while hard-pressed Republicans employ their proven tactic of character assassination.

“We will not throw the first punch but we’ll throw the last,” Obama asserted on Monday.