Senator's Image as Reformer Born in Crisis

It was the same decision that the panel reached about McCain. But, though the committee treated McCain and Glenn identically, their political fates could scarcely have been more different. Among the five senators, only McCain's career genuinely recovered -- and eventually thrived -- in the wake of the crisis.

'I Freely Admit My Errors'

Two days after the strategy meeting in his Washington office, McCain appeared at the Phoenix Sheraton Hotel before a thicket of cameras and Arizona reporters. Victoria Clarke planted herself a few feet away, and McCain told her to rub her nose if he sounded like he was on the verge of losing his temper.

McCain read from a prepared text that Jay Smith had helped to draft. "I will stand here and take your questions for as long as you have them," he told the media. "Anything you want to ask me."

A disarming speech followed, which included a swift admission: "I am not going to stand here and tell you -- or have the attitude -- that everything I have done is above reproach and without fault. Was I sufficiently sensitive to the appearance some of my actions were creating? Maybe not.

"I freely admit my errors. . . . I committed an error by not reimbursing American Continental for my travel on their corporate aircraft at the time of the travel, which members of Congress are required to do. This was wrong. I can honestly tell you that I did not do this intentionally. I had assumed all along that payment for the trips had been made. . . . John McCain may have made some poor judgments. But I have never used my office to aid any individual improperly."

McCain explained what had given him confidence in Keating's operations, citing written assurances from some of the financial world's sacred cows, including Alan Greenspan -- who in the years before becoming the Federal Reserve Board chairman, had served as a consultant to Keating -- and what was then known as Arthur Young & Co., one of the Big Eight accounting firms. And while the speech skirted over an issue of earlier letters McCain wrote to the Reagan White House in support of Keating's efforts to reduce federal restrictions impeding his investment plans, his implicit message was clear: Even the sharpies had been fooled by Keating -- there was plenty of fault to go around.

He quoted a Greenspan testimonial about Lincoln Savings and Loan's operations during the Fed chairman's days as a Keating adviser: " 'I believe that Lincoln . . . has demonstrated that it has the adequate capitalization, sound business plans, managerial expertise and the proper diversification to which the Board refers.' "

After the speech, McCain calmly answered questions until there were no more.

It was, even in the judgment of critics, a bravura performance. The Arizona Republic newspaper, which had earlier viewed McCain's Keating-related comments as defensive and unseemly, signaled its approval: "He freely owned up to error and carelessness, refused to blame his staff, and left the news conference with his reputation intact." The Republic's sister paper, the Phoenix Gazette, noted that he had checked his fury at the door.

The McCain team's public relations onslaught had just begun. Over the next six weeks, the senator became ubiquitous on TV news shows and in major publications, granting interviews to 21 media giants that included the three major networks' evening news shows, The Washington Post, the New York Times, Time magazine, PBS's "The MacNeil-Lehrer Newshour," and ABC's "Nightline" and "This Week With David Brinkley."

"It wouldn't be successful if he was seen as ducking somebody . . . so he talked to virtually everybody," Smith remembers. It worked. Commentators and even some of the Federal Home Loan Bank Board regulators praised McCain for talking openly about his mistakes. By then, the subject of his apologies had grown to include his simple presence at the Keating Five meetings. In a November 1989 interview with PBS's Roger Mudd, he declared: "The appearance of five senators meeting with one regulator is clearly . . . wrong. . . . I made mistakes, and serious ones. But I did not abuse the power of my office."

In denying having done anything unethical while repeatedly emphasizing his regret about the "appearance" of having made a mistake, McCain was gambling that voters would discern a distinction. Seeing the risk in the strategy, Mudd observed that it was a "roll of the dice." McCain, he said, "has fully thrown himself on the mercy of public opinion."