The Senate Select Committee on Ethics today will open what are expected to be exhaustive and contentious public hearings in the highly publicized "Keating Five" case that could provide a rare tour of the netherworld of campaign fund-raising and its impact on Washington's official business.
For the five senators accused of improperly intervening with federal regulators on behalf of Charles H. Keating Jr., a high-flying savings and loan entrepreneur who raised or contributed more than $1.3 million to their campaigns and political causes during the mid-1980s, the stakes are clear.
The political careers of Sens. Alan Cranston (D-Calif.), Dennis DeConcini (D-Ariz.), John Glenn (D-Ohio), John McCain (R-Ariz.) and Donald W. Riegle Jr. (D-Mich.) hang in the balance as the committee strives to wrap up its year-long investigation of the complex case by year's end.
Robert S. Bennett, special counsel to the committee, recommended Sept. 10 that it take no action against Glenn and McCain but move to a more intensive probe of Cranston, DeConcini and Riegle. A bitter partisan squabble then broke out over the political implications of a preelection exoneration of McCain, the only Republican in the group, and the sharply divided committee decided instead to hold public hearings on all five cases.
Even before the hearings start today, some of the senators maneuvered for advantage. Cranston's attorney yesterday questioned the impartiality of committee member Jesse Helms (R-N.C.), who was quoted by newspapers during his recent reelection campaign as characterizing Cranston as "the leading water carrier" for Keating. Also, the committee rejected requests by McCain and Glenn for separate hearings and turned down a request by McCain, Glenn and DeConcini for release of Bennett's 350-page report.
Together, the five senators' years in elective office total more than a century. The group includes the Senate's assistant majority leader (Cranston) and three committee chairmen (Riegle of Banking, Glenn of Governmental Affairs and Cranston of Veterans' Affairs). They also include two of Congress's relatively few military heroes: Glenn, the former Marine Corps colonel who was the first American astronaut to orbit the earth, and McCain, a former Navy pilot who was held prisoner-of-war in North Vietnam for 5 1/2 years.
While less obvious, the stakes for the Senate -- and for Congress as a whole -- are no less critical.
Across the country, the public's regard for Congress as measured by opinion polls has sunk to new lows, in part because of a widely-expressed perception that lawmakers are more interested in self-preservation than public service. The thrift industry debacle hits closer to home than most scandals, with Keating's bankrupt Lincoln Savings and Loan accounting for at least $2 billion of the estimated $500 billion that Americans will have to pay in taxes to clean up the mess. Moreover, the Keating Five case puts a human face on the disaster, offering targets for blame in a situation that otherwise seems to defy accountability.
Inside Washington, the stakes are high too. A key question in the Keating Five probe is how far Congress should go in intervening in the operations of the executive branch, especially the handling of individual cases by regulatory agencies.
In the delicate balance of power between the White House and Congress, this is a largely obscure but important power that lawmakers jealously guard to assure that the laws they enact are carried out as intended and that their constituents are protected from overzealous regulators.
For the Senate more than the House, the current rules on such intervention with government agencies are fuzzy at best, reflecting concern that any attempt to draw lines would almost inevitably restrict lawmakers. The committee's findings in the Keating case could set new parameters that will guide lawmakers in dealing with constituents, bureaucrats and campaign fund-raisers and, in the process, put new limits on congressional powers.
At the heart of the case against the five senators are two meetings in April 1987 when they gathered in DeConcini's office to discuss with federal thrift regulators Keating's complaints about the two-year investigation of his boom-to-bust Lincoln Savings and Loan in Irvine, Calif. Riegle attended the second meeting but not the first.
Accounts of the meetings differ. Edwin J. Gray, then-chairman of the Federal Home Loan Bank Board, who attended the first meeting on April 2, said the senators suggested a "quid pro quo" under which Lincoln would make more home mortgage loans if regulators would ease up on tough new investment rules. The senators have denied this, saying that they were only trying to assure that Keating -- whose business interests touched all of their states -- was being fairly treated.
At the second meeting in DeConcini's office on April 9, the five senators pressed their case with other regulators, who finally warned the lawmakers that they were prepared to make criminal referrals about Lincoln to the Justice Department.
At this point, McCain, Glenn and Riegle have said they ceased efforts to intervene on Keating's behalf. However, Riegle did meet at least two more times with Keating, according to information obtained by the ethics panel.
Despite the warnings of a criminal investigation of Lincoln, Cranston and DeConcini continued their efforts on Keating's behalf, urging that the government permit sale rather than seizure of the thrift, until just before the government seized Lincoln in April 1989. FHLBB member Roger F. Martin told the Ethics Committee that he received calls at home from the two senators urging Lincoln's sale -- one from Cranston at 10 p.m., the other from DeConcini at 5:30 the following morning.
After the April meetings, Cranston solicited Keating for what eventually became $850,000 in corporate donations to finance three voter registration groups under his control.
For the ethics panel, the key issue is likely to be the connection, if any, between the senators' actions and the money that Keating raised for them before, during and after his efforts to get their help for his failing thrift. Senate rules say that members should not accept compensation in exchange for "influence improperly exerted" by virtue of the senator's position; they also call for disciplinary action when a senator engages in "improper conduct which may reflect upon the Senate."
The Senate Ethics Committee has not dealt before with the issue of how far senators can go in using their influence with regulators on behalf of supporters and contributors. The issue was raised in the House Ethics Committee's inquiry into efforts by former Speaker Jim Wright (D-Tex.) on behalf of Texas thrifts; the panel's counsel questioned the propriety of Wright's actions but the committee held that he did not engage in undue influence. Wright subsequently resigned from the House.
The hearings, which will be held in the cavernous new hearing room in the Hart Senate Office Building, will be televised gavel-to-gavel by the C-SPAN cable network. The trial-like proceedings, complete with attorneys, voluminous exhibits and adversarial cross-examinations, are scheduled for two days this week, two days next week and five days the following week. They could go into December, some participants believe.
Although they are grouped together for the hearing, the senators will be judged separately by the committee, which can recommend anything from exoneration to expulsion from the Senate. They will appear in a sequence determined by lot that bears an uncanny relationship to their presumed degree of trouble: starting with McCain and Glenn and ending with Riegle, DeConcini and Cranston.
After opening statements from all the key players, Bennett will begin to lay out his case. As many as two dozen witnesses may be called, some by Bennett, some by the senators. Keating, recently released from jail on $500,000 bond in California where he is facing fraud charges in connection with sale of junk bonds, is not expected to testify. He declined to answer the committee's questions earlier, citing constitutional protections against self-incrimination, and the committee has said it is not considering granting him limited immunity to testify.