McKeating: The Creation of Trust and Its Betrayal

The Obama campaign has pulled a slickly produced video out from its bag of tricks, which takes us back to the great savings & loan failure of the late 1980s.

It is a simple production that wraps Senate Ethics Committee hearing clips - featuring a younger John McCain - around an interview with William Black.

Black was a regulator with the Federal Home Loan Bank Board from 1984 to 1994; an appointee of Republican President Ronald Reagan.

He does a fairly straightforward job in laying out the process by which over 700 financial institutions failed. The taxpayers, of course, picked up the tab.

Sound familiar?

The central figure was, in the words of Black, a "very nasty and fraudulent man" by the name of Charles Keating.

Keating took exception to a new federal rule prohibiting the direct investment by savings & loans in property, because it limited his ability to play with the money regular citizens had entrusted to his Lincoln Savings & Loan.

Keating was on the hook for "control fraud" - looting his savings & loan - to the tune of over $615 million.

Fraud is defined by Black as, "the creation of trust and its betrayal."

It's not a labyrinthine, complicated story. Keating gave a lot of money to five legislators, including McCain, and then asked them in a private meeting not to enforce the direct investment rule against him.

Black describes the two men as "confidants and mutual political supporters." McCain received $112,000 over a few years from Keating along with paid vacations for his family in the Bahamas.

You could probably fill in the rest, but anyway, the senators at the meeting caved to Keating, the problem spread, and the crisis went nationwide. The government, or you (depending upon your politics), applied a $3.4 billion band-aid.

Said Black: "Sen. McCain knew the facts because we briefed him. He knew this was a criminal enterprise. He knew that what was being done was improper. He knew how much undo pressure his words brought to bear. He was uniquely in a position where he could have protested this. Stopped it. Stopped this loss. But he did nothing."

Now, this is certainly a backward reach for a campaign of "Hope" and "Change." It is certainly the "old" brand of politics Sen. Obama rails against.

But with the unfortunate Sarah Palin (R-Alaska) squeaking about the "unrepentant domestic terrorist" William Ayers in a desperate effort to distract the electorate from its own economic woes, the Obama campaign was not interested in doing the John Kerry noble loser thing.

It's tit-for-tat and it's working. For every dutiful parroting of Palin's charge by the media, which was predictable, there is an equally slavish mention of the Keating Five, which on the whole, is a more severe indictment of McCain's judgment than the Ayers flap is to the Illinois senator's.

That certainly was the conclusion of the Senate Ethics Committee's report. which said, and we quote, McCain had demonstrated "bad judgment."

McCain is saying this was all a long time ago.

Not as long ago as Bill Ayers' turn with The Weathermen.