Sen. McCain

Charlie Keating was a political friend and supporter from 1981 to 1987. When he came to see me in March of 1987 and asked me to do something I thought was improper, I said no. When he asked me to get Ed Gray off his back, I said no. When he asked me to negotiate for him, I said no. The only thing I said I could do was to inquire whether American Continental Corporation and Lincoln Savings were being treated fairly.

On April 2nd, I attended a meeting in Senator {Dennis} DeConcini's office with {then-Federal Home Loan Bank Board} Chairman Ed{win J.} Gray to ask those questions about whether Lincoln was being treated fairly. I asked Mr. Gray if it was proper to meet and ask questions. He said it was proper. Chairman Gray said he didn't know the facts of the Lincoln investigation, and he suggested that we meet the following week with the Bank Board regulators from San Francisco, who could answer my questions. I again asked if that would be proper. Mr. Gray said it would be proper.

On April 9th I joined other senators in Senator DeConcini's office to meet with these San Francisco regulators as Mr. Gray had suggested. There's a transcript of that meeting, which has been referred to several times already during this hearing. I'd like to excerpt again what I said at the beginning of that meeting . . . . Quote: "One of our jobs as elected officials is to help constituents in a proper fashion. American Continental is a big employer and important to the local economy. I would not want any special favors for them." And I went on to say, "I do not want any part of our conversation to be improper."

I was able at this April 9th meeting to make my inquiries. I learned at this meeting that Lincoln's complaints of bad treatment from the regulators were unfounded, and that there would be a criminal referral to the Justice Department against Lincoln.

That, Mr. Chairman, was the end of any involvement I had with American Continental or Lincoln Savings. From then on, I had no further dealings at all with the Federal Home Loan Bank Board. I had no further contact on this issue with other government officials. I had no contact with Danny Wall or others to support the sale of Lincoln Savings in 1989.

I had no further contact with Mr. Keating or any American Continental representatives. I neither solicited nor accepted any campaign contributions from Mr. Keating or American Continental employers. My relationship with Mr. Keating was ended, over. There's nothing more. Sen. Cranston

With all my heart and soul, I want to make very clear certain facts that the evidence presented to you subsequently will substantiate. One, I engaged in no unethical conduct. Two, you know that I broke no law. Three, you know that I broke no Senate rule. Four, you know that I pocketed no money, that there was no personal gain for me or any member of my family.

Most of the money now in question was in the form of charitable deductible contributions for nonpartisan registration drives in California and in approximately 20 other states, all conducted by organizations I did not control, all of this after I was reelected in 1986.

Five, I never recommended, much less demanded, that any government official do anything improper or grant any constituent any special favor. . . . Six, I did nothing that affected or delayed any government action in any way. . . . Seven, at the two now-famous 1987 meetings of senators and regulators, on April 2nd, I asked only why an audit was going on endlessly. And on April 9, I attended for only a few seconds and said nothing of consequence. There is absolutely no evidence to the contrary.

Eight, I had good reason to believe that a business which employed almost 1,000 of my constituents in my state of California -- and thus benefited their families and the communities where they lived -- was being dealt with improperly by a huge bureaucracy which couldn't make a decision and had a reputation for incompetence. . . .

Nine, when I first received complaints regarding the way bureaucrats were mishandling this business, and for a long, long time thereafter, there was abundant substantiating evidence that this business was solvent, sound, and well managed. . . .

Since I will not be running again, I will not have to engage in campaign fund-raising. But all of you, or most of you, will, and so will most of our present colleagues and future senators. You and they will have to do so under present laws and Senate rules until those laws and rules are changed. They should be changed, but they haven't been changed yet. Until they are, the Senate and every senator and candidate will be in dire jeopardy, the sort of jeopardy that I and Senator DeConcini and Senator Glenn and Senator McCain and Senator Riegle currently face. . . .

The notion, the notion, that I would risk my reputation and the reputation of this body which I love by raising money in any improper way is simply preposterous. All that any of us have after public office is our record and our reputation. They are of greater value than any amount of money. . . . .

These charts show the Senate staffers who have been authorized by their senators and by Rule 41 to raise funds. Some of these staffers are their senator's principal fund-raisers; some have enormous power to schedule, to expedite, to slow down, to draft and amend legislation, and also to deal with the executive branch. . . To use some words Mr. Bennett uttered yesterday, these are people who "hold the keys to access". . . .

Let me ask you this, members of the committee: How many of these Senate staffers who are legally empowered to raise money do you think have sat in meetings with their senator and contributors, potential or proven, when substantive issues were discussed, like problems with bureaucrats and legislation? How many of you. . . could testify that some member of your Senate staff who you have authorized to raise money has never ever said to you something like, "John Doe is coming in and about to meet with you, and I'll sit in; here's what I think you ought to do -- and, remember, he's been a big help to you"?

I say that it's absurd to suggest that fund-raising and substantive issues are separated in Senate offices by some kind of wall. The notion that it violates Senate rules and established ethical standards if a fund-raiser participates in a meeting in which substantive issues are discussed is sheer hypocrisy. Plainly, the Senate in its wisdom has decided that there is no appearance of impropriety in this situation, and therefore there was no appearance of impropriety in mine. . . .

We can't change the rules in midstream. It may be that after this experience the Senate will decide to adopt new rules governing how and when senators may receive contributions. But that reform, if it comes, must not be seen as reflecting on the integrity of honorable people, including myself, who have conducted our public lives always in compliance with the present law and rules as we understand them.

I have made justice, fairness, and moral behavior the guiding stars of my life. I do not waver from those principles. This experience has been a shattering one for me and for my family. But I am confident that this hearing will end with no blemish on my cherished reputation. Sen. Riegle

Some of our existing practices. . . stretch back now at least 200 years, and they've worked pretty well for a long time. But at the same time we may have come to a point where some things need to be changed, and the more I look at it, the clearer it is that we do need campaign-financing reform, which is something that I've long and actively supported.

I think it's right to say that our campaigns cost too much, that too many good people lack the resources to run for office and special-interest money is coming to dominate the electoral process. . . . In my view, it doesn't look right and it isn't right. And as independent as any of us may be -- and I think I'm as independent as anybody here, and I think my career shows that -- the present campaign-financing system is cutting against our democracy and it must be changed. . . . .

Let me move directly to this case now, and say, first, that I am fully responsible for my official conduct as a senator, and I believe my conduct was absolutely proper in this matter. And as for any judgments or misjudgments, I made some years ago in this matter, I'm fully responsible for those as well. . . .

The record shows that I only had two contacts with the regulators where the subject of Lincoln arose. . . . I think both contacts were entirely proper and ethical and well within the appropriate standards of official conduct. And, frankly, if there were not an unrelated fund-raising event in the proximity of these two proper contacts, I wouldn't be here today. . . .

{Referring later to a news story that Keating had raised most of the money at a March 1987 event:} "I didn't like the appearance of it. . . because from that perspective then, I had gone to this meeting on April 9th, the year before, and while my going was proper, what I did was proper, I didn't like the appearance of that situation, and I said, look, we're sending the contributions back, and we sent them back. . . .

I've taken one step that you should know about. . . . I announced in July of this year I'm not going to let anybody else do fund-raisers for me that appear before either the Senate Banking Committee or the health subcommittee on the Finance Committee where I'm also the chairman of. I don't want people hosting fund-raisers who come before those committees. I don't want PAC contributions from those people. . . I'm not going to do it again in terms of this kind of a chance, exploding cigar going off or somebody like Keating in my face. . .

I would never dishonor my family name, or the public trust for any reason or purpose. You couldn't make me do it. . . . The idea that I would do it for a campaign fund-raiser is sheer nonsense. It's sheer nonsense. I have high standards; that's why I've been here 24 years and why I've been elected eight times, and I would never, in any way that I know, violate the rules or the ethics of this job. Sen. Glenn

I regard these public hearings as vitally important for two reasons. First, when these hearings are over, my conduct will no longer be the subject of speculation, of gossip and of innuendo. Everyone will know the truth. The truth is that at no time did I pare my principles or compromise my convictions. At no time did I ask for special treatment for anyone. And at no time did I trade favors or perform actions in return for money.

I acted honorably, I behaved honestly and I have neither tainted my own reputation nor tarnished the reputation of this body. So that's one reason these hearings are important to me. But there's another reason as well.

In my view, the single most vital task of this committee is to reaffirm the ethical standards that govern this body. So frankly I welcome this opportunity to tell you about the standards that guide my conduct as a United States Senator and how I applied them in the case of Lincoln Savings. . . .

In the spring of 1986 Mr. Keating's staff asked that I support the nomination of Mr. Lee Henkel to the Bank Board. Special counsel indicated yesterday Mr. Keating apparently went to considerable lengths to secure that appointment. When I was asked to support that nomination, I did not believe I had enough knowledge about Mr. Henkel's qualifications, and so I refused.

Then in the summer of 1986, Mr. Keating himself strongly urged -- strongly urged me to support the nomination of Daniel Manion to the United States Court of Appeals. But because I disagreed with Judge Manion on a number of critical issues, and did not believe that his confirmation would be in the best interests of Ohio or the nation, I again turned down Mr. Keating's request and voted against Mr. Manion. . . .

It is clear that I rigidly followed the ethical principles and guidelines that I long ago laid down for myself and my staff. And, briefly, those guidelines are: First, no matter who asks for my assistance, I have instructed my staff to ask for reasonable evidence that the complaint has substance. We then make our decision strictly on the merits of the case involved. I have never performed an official act on behalf of anyone because he or she made a political contribution, nor have I ever refused to act because they did not make a political contribution.

Second, one of my duties as an elected representative is to ensure that regulatory agencies treat citizens fairly and responsibly, but I recognize that any intervention I undertake must be both limited, must be circumscribed, circumspect, and must never extend to advocating special treatment for anyone.

And, third, and finally, I will not accept political contributions from anyone I know to be under investigation or from anyone who even implies that his contribution is linked to a request for assistance.

These are my principles, and I have always followed them, and I always will.

You have known me as a colleague for nearly 16 years and the people of Ohio have known me for over 30 years. I want both you and them to know that if there is one thing about me that has never changed, it is my unshakable belief that public service is a public trust. And that will never change.