Bennett Likens ‘Keating 5' to 800-Pound Gorilla : Thrifts: The Ethics Committee counsel brushes aside assertions by the senators that they were doing their duty when acting for Lincoln S&L;.


As the Senate Ethics Committee finished a grueling 26 days of hearings Wednesday, special counsel Robert S. Bennett accused five senators of acting like “an 800-pound gorilla” when they intervened with regulators on behalf of thrift owner Charles H. Keating Jr.

Bennett brushed aside assertions by lawyers for the senators that they were only doing their duty as elected officials in going to bat for Keating, a combative savings and loan operator who contributed $1.3 million to their political campaigns and causes.

“I don’t accept that explanation from my children--'Dad, everybody does it,’ ” Bennett said in his valedictory speech to the Ethics Committee, which began its inquiry 15 months ago.

But Committee Vice Chairman Warren B. Rudman (R-N.H.) drew a sharp distinction between the widespread public anger directed at the senators as symbols of the nationwide savings and loan scandal and the question of whether they violated the Senate’s ethics standards.


Some regulators have alleged that the efforts of the senators delayed a government takeover of Keating’s Lincoln Savings & Loan, based in Irvine. Lincoln’s eventual collapse is expected to cost taxpayers $2 billion, the most expensive thrift failure on record.

“The common public perception that these five senators, by meeting with the regulators, cost the taxpayers $2 billion is simply not accurate,” Rudman said. “The regulators stood their ground in dealing with Lincoln” and were not swayed by two 1987 meetings with senators, he said.

Rudman argued that the ethical issue facing the committee is not whether a senator should intervene with regulators at all, but whether there should be “narrower limits on what a (senator) can do based on the type of agency and the nature of the agency’s proceedings.”

The six committee members must now sit in judgment of five colleagues: Sens. Alan Cranston (D-Calif.), Dennis DeConcini (D-Ariz.), Donald W. Riegle Jr. (D-Mich.), John Glenn (D-Ohio), and John McCain (R-Ariz.).


The panel’s mission is broadly defined: to decide whether any of the five acted in a way to bring discredit on the Senate. It has a wide range of options: It can absolve the senators, write letters of reprimand, or recommend punishment by the full Senate.

It seems virtually certain that the panel will recommend a serious punishment for at least one of the five. Committee member Trent Lott (R-Miss.) said recently he would be “amazed” if at least one case did not reach the Senate floor by March.

The likeliest targets for punishment appear to be Cranston, the biggest recipient of Keating’s largess, and DeConcini, who took the most aggressive stance in arguing Lincoln’s point of view before regulators.

Riegle’s fate is uncertain. Bennett said Riegle played a pivotal role in arranging the meeting with regulators, and he criticized the senator for his persistent inability to recall the details of his contacts with Keating.

Glenn and McCain are expected to be fully exonerated, a recommendation Bennett first made behind closed doors to the committee last year. But the members could not agree on disposing of any of the cases and finally decided to hold public hearings, which began in November.

Defense arguments were offered Wednesday by lawyers for the senators, and DeConcini made a personal appeal to the committee. “I resent the fact I have to stand here and tell the committee and the American public I intervened for 2,000 Arizonans and not for Charles Keating because he gave me a contribution,” he said. Lincoln’s parent firm, American Continental Corp., was headquartered in Arizona and was the sixth biggest corporation in the state.

John M. Dowd, McCain’s lawyer, emphasized that his client had refused to do Keating’s bidding, ending a long friendship. McCain “placed integrity above friendship, and principle above political support,” Dowd said.

Glenn’s lawyer, Charles F. C. Ruff, told the committee Glenn “wants you to test him by the toughest ethical standards.”


Riegle told reporters: “I think the case has evaporated.” His lawyer, Thomas C. Green, told the committee, if senators can’t help constituents . . . lock your doors and hibernate because your job has basically been truncated.”

Most of Keating’s contributions, $850,000, were funneled to groups active in voter registration drives. Cranston recommended that Keating support these organizations but enjoyed no personal benefits, said his lawyer, William W. Taylor III. “Not one penny went into Sen. Cranston’s pocket, not one penny went into Sen. Cranston’s campaign,” Taylor said.

Cranston had been reelected to a six-year Senate term in 1986 and could derive no benefit from registration efforts in 1987 and 1988, Taylor noted. “The only evidence he was doing it (was because) he believed in it, believed it was good for the country,” Taylor said.

Cranston, who is suffering from advanced prostate cancer, waived his opportunity for cross-examination by the committee because he is resting in California in preparation for surgery later this month.

Taylor told the committee: “Now in the twilight of his career, Alan Cranston must face the accusation, either expressed or implied, that he became Charles Keating’s marionette and single-handedly changed the course of decisions of the Federal Home Loan Bank Board. That . . . is preposterous.”