Tag Archives: Keating Five

Not Eric Holder again! By the way, I thought corporations were people . . .

 . . . and don’t people go to jail when they commit crimes? Well, they don’t when  the head of the Federal justice system is Eric Holder who is NOT stepping down for the second term and who was head of Justice in the spring of this year when this was going on.

HSBC Holdings Plc (HSBA)’s head of group compliance, David Bagley, told a Senate hearing he will step down amid claims the bank gave terrorists, drug cartels and criminals access to the U.S. financial system by failing to guard against money laundering.

Bagley was among at least six HSBC executives who testified before the Senate’s Permanent Subcommittee on Investigations today after the panel released a 335-page report describing a decade of compliance failures by Europe’s biggest bank. London-based HSBC enabled drug lords to launder money in Mexico, did business with firms linked to terrorism and concealed transactions that bypassed U.S. sanctions against Iran, Senate investigators said in the report.

So Mr. Bagley and his buddies said they were ever so sorry before heading back to the company ‘retreat’ at Cabo and after, of course, paying a fine in an amount that they can earn back in a week.

That’ll show ’em alright.

Obama’s Cabinet has included some really terrific, skilled and well-suited people. I don’t count Holder among them. I’ll admit to being ignorant regarding many of his policies and initiatives. Maybe they’re good. Maybe they’re great. But when it comes to punishing corporate ‘persons’, those whose crimes almost brought down the world economy? FAIL..

No investment bankers are in jail. No one from AIG is in jail. Not even anyone from Countrywide. Or Arthur Anderson. Or the other rating agencies. And how about LIBOR? Any US companies complicit in that?

By any  measurement, letting them off with fines is sufficient reason to judge him a failure. I suppose that only when they do it two more times will they, like the 20-year-old marijuana smoker down the street, head to the big house.

The five Senators who made up the Keating Five plus Mr. Keating (bottom right)

The five Senators who made up the Keating Five plus Mr. Keating (bottom right)

Anyone remember the Savings & Loan scandal in the Reagan years? It wasn’t as far-reaching as 2008, but it was pretty damn big. There were plenty of perp walks (but not for everyone, not for everyone – see below). A lot of people paid for their corporate crimes. But that’s s-o-o-o yesterday.

For you younger ones:

Savings and loan crisis in which 747 institutions failed and had to be rescued with $160 billion in taxpayer dollars.[33] Reagan’s “elimination of loopholes” in the tax code included the elimination of the “passive loss” provisions that subsidized rental housing. Because this was removed retroactively, it bankrupted many real estate developments which used this tax break as a premise, which in turn bankrupted 747 Savings and Loans, many of whom were operating, more or less, as banks, thus requiring the Federal Deposit Insurance Corporation to cover their debts and losses with tax payer money. This with some other “deregulation” policies, ultimately led to the largest political and financial scandal in U.S. history to that date. The savings and Loan crisis. The ultimate cost of the crisis is estimated to have totaled around USD $150 billion, about $125 billion of which was directly subsidized by the U.S. government, which further increased the large budget deficits of the early 1990s. See Keating Five.

Who were the Keating Five you may ask? And why are they relevant?

The Keating Five were five United States Senators accused of corruption in 1989, igniting a major political scandal as part of the larger Savings and Loan crisis of the late 1980s and early 1990s. The five senators – Alan Cranston (Democrat of California), Dennis DeConcini (Democrat of Arizona), John Glenn (Democrat of Ohio), John McCain (Republican of Arizona), and Donald W. Riegle, Jr. (Democrat of Michigan) – were accused of improperly intervening in 1987 on behalf of Charles H. Keating, Jr., Chairman of the Lincoln Savings and Loan Association, which was the target of a regulatory investigation by the Federal Home Loan Bank Board (FHLBB). The FHLBB subsequently backed off taking action against Lincoln.

Lincoln Savings and Loan collapsed in 1989, at a cost of over $3 billion to the federal government. Some 23,000 Lincoln bondholders were defrauded and many investors lost their life savings. The substantial political contributions Keating had made to each of the senators, totaling $1.3 million, attracted considerable public and media attention. After a lengthy investigation, the Senate Ethics Committee determined in 1991 that Cranston, DeConcini, and Riegle had substantially and improperly interfered with the FHLBB’s investigation of Lincoln Savings, with Cranston receiving a formal reprimand. Senators Glenn and McCain were cleared of having acted improperly but were criticized for having exercised “poor judgment”.

All five senators served out their terms. Only Glenn and McCain ran for re-election, and they both retained their seats. McCain would go on to run for President of the United States twice, including being the Republican Party nominee in 2008.

Like I said, it wasn’t all perp walks. A number of hands were slapped. And for them, that was that. (Another of the big players was GHW Bush’s son Neil Bush. Big play-ah.)

But no one smoked any weed, so . . .