McCain: ‘Mark my Words’ — Campaign Finance ‘Scandal Not Far’

Photograph by Pete Marovich/Zuma Press

Sen. John McCain

For years, John McCain’s name was synonymous with campaign finance reform.

Bruised by his exposure to a scandal in his early years as a senator involving Arizona businessman Charles Keating, a generous campaign contributor who sought help with federal banking regulators as his Lincoln Savings and Loan was going down, McCain emerged as a fervent advocate of restricting big donors. He and former Senator Russell Feingold of Wisconsin succeeded in reeling in “soft money.”

Yet now the Republican senator and 2008 presidential nominee who was known for bucking his own party has aligned with party efforts to block requirements that nonprofit groups spending millions to elect Republicans reveal their donors.

McCain yesterday joined a Republican filibuster to prevent the Senate from voting on the Disclose Act and will do so again today. The legislation would require nonprofits like the U.S. Chamber of Commerce, Crossroads GPS and Priorities USA, the nonprofit founded by former aides to President Barack Obama, to tell the public who’s funding the ads they are seeing on television.

“In its current form, the Disclose Act is closer to a clever attempt at political gamesmanship than actual reform,” McCain said on the Senate floor. “By conveniently setting high thresholds for reporting requirements, the Disclose Act forces some entities to inform the public about the origins of their financial support, while allowing others – most notably those affiliated with organized labor – to fly below the Federal Election Commission’s regulatory radar.”

The threshold McCain cites — contributions of less than $10,000 need not be reported — is designed to prevent membership groups like the National Rifle Association from having to disclose all of their dues-paying members.

And while the individual who pays $100 a month to his or her union won’t be publicly identified, neither will the small business who pays $5,000 a year to be part of the National Federation of Independent Business. The $10,000 threshold was designed to capture the huge givers to these nonprofits, not small donors, the same way contributors of $200 or less to political campaigns don’t have to be identified.

Despite the concerns raised about labor unions, business interests have given 15 times more money to campaigns, PACs and outside groups than organized labor so far for the 2012 election, according to the Center for Responsive Politics.

McCain went on to say that “one can easily see that a major scandal is not far off. And there will be a scandal. Mark my words there will be one. The American people know it and I know it.”

McCain, for his part, is mindful of  avoiding scandal.

Twenty five years ago, Charles H Keating Jr. was seeking help as the government moved to seize Lincoln Savings and Loan, a subsidiary of his American Continental Corp. He called on Senator Dennis DeConcini, an Arizona Democrat who had collected thousands of dollars for his campaigns from Keating. He wanted a meeting with regulators, which DeConcini arranged, along with five members of Congress.

Keating had supported McCain early on as well, holding a fund-raiser for him in his first campaign for the U.S. House in 1982, collecting more than $11,000 from 40 employees of American Continental Corp. In 1983, as McCain readied for re-election, Keating hosted a $1,000-a-plate dinner for him.  When McCain ran for the Senate in 1986, Keating delivered more than $50,000.

Starting in April 1987, Keating met with federal regulators and five senators: DeConcini’, McCain, Alan Cranston of California, John Glenn of Ohio and Don Riegle of Michigan. As a group, they had collected $1.3 million from Keating for campaigns — and later become known as “The Keating Five.”

In April 1989, the government seized Lincoln, which declared bankruptcy. In September 1990, Keating was charged with 42 counts of fraud.  In January 1993, a federal jury convicted him of 73 counts of wire and bankruptcy fraud in the collapse of American Continental and Lincoln. Keating was sentenced to 12 years and seven months in prison and served 50 months before the conviction was overturned on a technicality. In 1999, at age 75, he pleaded guilty to four counts, sentenced to time served.

In 1991, the Senate Ethics Committee censured Cranston and reprimanded the other senators who had met with Keating for “poor judgment.”

“The appearance of it was wrong,” McCain acknowledged. “It’s a wrong appearance when a group of senators appear in a meeting with a group of regulators because it conveys the impression of undue and improper influence. And it was the wrong thing to do.”

McCain devoted years that followed to campaigning for tougher campaign finance laws, and he was the last major party’s candidate for president to accept public financing for his campaign — the saga of the Keating Five playing no role in his loss in November 2008 to President Barack Obama, who, like Republican Mitt Romney, is running this year with the support of super-PACs and non-profit groups unlimited in fundraising or spending.

Mark Silva contributed to this report.

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