After the U.S. banking industry was deregulated in the 1980s, savings and loan banks were allowed to invest deposits in commercial, not just residential, real estate. Many savings banks began making risky investments, and the Federal Home Loan Bank Board (FHLBB) tried to stop them, against the wishes of the Reagan administration, which was against government interference with business.
In 1989, when the Lincoln Savings and Loan Association of Irvine, Calif., collapsed, its chairman, Charles H. Keating Jr., accused the FHLBB and its former head Edwin J. Gray of conspiring against him. Gray testified that five senators had asked him to back off on the Lincoln investigation.
These senators -- Alan Cranston of California, Dennis DeConcini of Arizona, John Glenn of Ohio, Donald Riegle of Michigan and John McCain of Arizona -- became known as the Keating Five, after it was revealed that they received a total of $1.3 million in campaign contributions from Keating. While an investigation determined that all five acted improperly, they all claimed this was a standard campaign funding practice.
In August 1991, the Senate Ethics Committee recommended censure for Cranston and criticized the other four for "questionable conduct."
Cranston had already decided not to run for reelection in 1992. DeConcini and Riegle served out their terms but did not run for reelection in 1994. John Glenn was reelected in 1992 and served until he retired in 1999. John McCain continued his work in the Senate, and ran unsuccessfully for president in 2008.
A similar toxic combination of money and power was involved in the Chen Shui-bian scandals in Taiwan.
