Charles Keating, whose leadership of a California savings and loan made him the face of a banking crisis and a millstone around the politicians who tried to help him, died March 31 at a Phoenix hospital after a short illness. He was 90.
U.S. prosecutors who dogged Keating for years said he and his associates looted Lincoln Savings & Loan Association into bankruptcy in the 1980s. The cost to taxpayers, according to the Federal Deposit Insurance Corp., was $3.14 billion. He served more than four years in prison.
A Phoenix land developer, Keating took control of Lincoln in 1984. Rather than write mortgages, the central business of most savings and loans, Keating grew Lincoln 10-fold by soliciting Wall Street's top brokerages to send large deposits its way, in exchange for generous fees. Keating used the deposits to buy high-yield junk bonds and develop more real estate.
While running Lincoln, Keating became an outspoken critic of regulators, especially the Federal Home Loan Bank Board and its chairman at the time, Edwin Gray, for their efforts to tighten curbs on risky lending and investments by S&Ls. When the bank board's San Francisco office in March 1986 opened an investigation into Lincoln's rapid growth, Keating asserted his political influence, making campaign donations to cultivate allies in Washington.
Five senators were investigated by the Senate Ethics Committee for meeting with regulators on Keating's behalf. One of the so-called Keating Five was Arizona Republican John McCain, whose involvement with Keating, though minimal in the judgment of the ethics panel, provided fodder for his opponents all the way through his unsuccessful 2008 presidential campaign.
Asked whether his giving caused politicians to take up his cause, Keating famously answered, "I certainly hope so."
In a case-closing deal with prosecutors after earlier convictions were tossed out, Keating pleaded guilty in 1999 to four counts of fraud. His sentence was the prison time he already served.
After his prison sentence, Keating separated from his longtime wife, Mary, and lived in Phoenix, the Los Angeles Times reported. Survivors include his wife, son and four daughters.