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Monday, October 17, 2016

WHO ARE THESE GUYS?

I would not have gotten along with John Birch. Probably, whatever your politics, neither would you have. One of his college professors described Birch as “a one-way valve; everything coming out and no room to take anything in”. Honestly I think the odds were pretty good that eventually somebody somewhere was going to shoot him for shooting his mouth off at the wrong time. Politics had nothing to do with it. It just so happened that this human bull  finally met his china shop on a road in northern China, and that the hot head who pulled the trigger happened to have been a communist. It was just as likely the shooter would have been his next door neighbor.
“Oh, we're meetin' at the courthouse at eight o'clock tonight. You just walk in the door and take the first turn to the right. Be careful when you get there, we hate to be bereft. But we're taking down the names of everybody turning left. Oh, we're the John Birch Society, the John Birch Society. Here to save our country from a communistic plot. Join the John Birch Society, help us fill the ranks. To get this movement started we need lots of tools and cranks.” (lyrics and music by Michael Brown) http://www.youtube.com/watch?v=pG6taS9R1KM
His commanding officer in the forerunner of the CIA, Major Gustav Krause, described the situation rather simply; “Militarily, John Birch brought about his own death.” Birch was a life long missionary on a military mission on 25 August, 1945, when he ran into a patrol of Mao’s Red Army. The commander asked Birch to hand over his revolver, and, surrounded by nervous soldiers, Birch decided to argue about it.  Eventually, embarrassed and frustrated, the officer shot him. The other members of Birch’s group had handed over their weapons. They were held for a few hours and then released unharmed. But the role of the missed opportunity for the application of simple common sense in John Birch's death did not stop candy-king Robert Welch from building an elaborate conspiracy theory around Birch’s death, Welch saw Birch as the first hero of the war against the international communist plan for world domination. Welch's vision of Birch as a hero evolved until it became a virtual black hole of paranoia and invective that eventually sucked into it everything Welch came in contact with, including the Republican Party, tooth decay, the Republican President Dwight David Eisenhower –whom Welch accused of being a “conscious, dedicated agent of the Communist Conspiracy” - and, believe it or not, the entire state of Alaska.
I’m not kidding about the Alaska thing. Conservative deity William F. Buckley even mentioned it in a column posthumously published in March of 2008, entitled “Goldwater, the John Birch Society, and Me.”  In discussing how to distance conservatism from the John Birch Society Buckley described Welch's belief that "the state of Alaska was being prepared to house anyone who doubted his doctrine that fluoridated water was a Communist-backed plot to weaken the minds of the American public.” I guess Alaska was supposed to be the new Texas.

The John Birch Society is and was part of a long line of paranoia  that stains the American psyche, from the anti-French and anti-Irish ‘Alien and Sedition Acts’ of 1798, through the “Order of United Americans”, the “Know Nothing Party”, the Immigration Restriction League, the anarchists scare, the “Yellow Peril”, the imaginary Pearl Harbor betrayal plots, the Black helicopters hiding in our national parks, the militia movement and the mythical bombs planted in the twin towers on 9/11. In fact the John Birch Society cemented all that lunacy together on a firm foundation of anti-Semitism. And this legacy of lunacy and head-up-your-exclusion-duct thinking officially began in Indianapolis on 9 December, 1958.
Robert Welch organized and financed the meeting. He had made his fortune by inventing “Sugar Babies”, “Junior Mints” and “Pom Poms”. And that wealth built on the little holes in children's teeth gave Welch the authority to lecture to 12 true believers for two days straight, about the worldwide communist conspiracy. Welch spewed out such gems of wisdom as, “When Woodrow Wilson, cajoled and guided...by the collectivists of Europe, took us into the First World War, while solemnly swearing that he would never do so, he did much more than end America's great period of happy and wholesome independence of Europe. He put his healthy young country in the same house, and for a while in the same bed, with this parent who was already yielding to the collectivist cancer. We never got out of that house again. We were once more put back even in the same bed by Franklin D. Roosevelt, also while lying in his teeth about his intentions, and we have never been able to get out of that bed since.”  You might notice a disturbing repetition of bed (and parent) analogies throughout Welch’s theology, whether the commies are in the bed or under the bed, alone in the bed or sharing the bed, there are a lot of beds and Commies. And cancer - he refers to cancer a lot.
Warned, Mr Welch, “…both the U.S. and Soviet governments are controlled by the same furtive conspiratorial cabal of internationalists, greedy bankers, and corrupt politicians. If left unexposed, the traitors inside the U.S. government would betray the country's sovereignty to the United Nations for a collectivist New World Order, managed by a 'one-world socialist government.'” Did I mention that the John Birch Society was anti-Semitic?  Ayn Rand, no Semitic lover herself, complained, “What is wrong with them (the JBS) is that they don't seem to have any specific, clearly defined political philosophy.” She might have been talking about the Tea Party, who, in fact, have been encouraged and funded by the JBS - a sort of thinking man’s Klu Klux Klan, while the KKK remains a sort of the idiot's version of the “Tea Partys”.
In 1966 the New York Times described the John Birch Society as “…the most successful and 'respectable' radical right organization in the country”, which, if you think about it, is the equivalent of being named Miss Congeniality in a mental institution -  she even brings smiles to the invisible people. Robert Welch died in 1985 and his creation is now watched over by the Koch brothers, whose father attended the first meeting of the Society. Each year the John Birch Society continues to produce cadres of indoctrinated Johnny Apple Seeds, planting fear in every dark nook and cranny where it might take root – sort of like tooth decay.
But the thing about Johnny Appleseed was that the all the apples which grew from his seeds were sour. Edible apples are possible only through a science of grafting – but then the John Birch Society never believed in science - too many Jews.
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Sunday, October 16, 2016

A LITTLE SOCIALISM

I can't think of a place in America that is more deceptive than North Dakota, 70,000 square miles of not what you thought.  It's most fertile land is the valley of the Red River of the North (above), except its not a valley. It's the bottom of a lake that's no longer there - usually. The river meanders back and forth across a prostrate terrain on its way to not the Pacific or the Atlantic, but the Arctic Ocean. Flowing north, every fall it freezes first at its mouth causing “the valley” below to flood. Every spring, when the rains come to Minnesota, the lake reappears again, but briefly, because in North Dakota the dominant long term weather pattern is drought. And in the second decade of the 20th century, with a population of little over half a million, most of whom were farmers and bred to be conservative and fiercely independent and Republican,  this state created openly socialistic industrial and economic institutions. Perhaps this was because North Dakota's raison d'ĂȘtre from its inception in 1889, was the business plan of two vertically integrated out-of-state corporations. 
Both the Northern Pacific railroad, created to benefit its shareholders, and the Great Northern Railroad, built by the megalomania of its owner, James J. Hill, sold land to European farmers, who bought their inexpensive new American farms sight unseen. The boat and train tickets, and the land itself were loss leaders for the corporations. Their profits came once the farmers were isolated on the Great Plains of North Dakota. They bought their food and supplies from corporate stores, financed their plantings through corporate banks, stored their harvests in corporate silos until it was transported on corporate railroads to be sold to corporate mills in Minnesota. In “bonanza” years the profits ended up in the corporate banks. And in the inevitable non-bonanza years, the farms were reposed by the banks, starting the cycle all over again.  It was a very profitable business plan, as long as the customers did not get wise that North Dakota was a colony of the Minneapolis-St. Paul, Minnesota capitalist- industrial complex.
Up to 1916 the great dividing force within North Dakota politics was race. In the 1870's the Red River Valley had been settled by snowy white Norwegians and Icelanders - mostly stern Lutherans. The west and center of the state was settled in the 1880's by creamy white Germans who had been living in Russia since the 16th century. They called themselves the “volksdeutsch” and they were rigid Catholics all.  But in 1916, the North Dakota normal was turned on its head by a political arsonist named Arthur Charles Townley, who split the rigid, stern conservative North Dakota Republican Party into kindling.
When he was a farmer along the Montana border, Townley  (above) was known as the “Flax King”. But an August snowstorm in 1913 cost him his farm and left him $80,000 in debt. He went into politics – Republican of course - there being only one real party in North Dakota - and he pushed for aid for farmers. He was confronted by his fellow Republican Treadwell Twitchell who told him to stop messing in state politics and “go home and slop the hogs”. Instead Arthur cranked up his model T Ford and went on a tour of the state, speaking to hundreds of small groups about the need for North Dakota's 78,000 farmers to organize in self defense. 
 Three thousand paid $6 each to join his Non-Partisan League, because he spoke their language. “If you put a banker, a lawyer, and an industrialist in a barrel and roll it down a hill,” he said, “you’ll always have a son-of-a-bitch on top.” In 1916 the Non-Partisan League had 40,000 members and elected Lynn Joseph Frazier as governor. And in 1918 they swallowed the Republican party whole and won every executive office in state government, control of the house and near control of the state Senate.
Governor Frazier (above, center) now became the head of the new Industrial Commission, a three man board running state owned businesses. Commissioner of Agriculture John Hagan (above, left) was entrusted to construct and run the state's Mill and Elevator Association in Grand Forks. It would buy wheat and barley from farmers at fair prices and sell the final products at a profit for the state. Attorney General William Lemke (above, right) oversaw operations of the BND, the Bank of North Dakota. All state and local tax revenues would be deposited in the bank, and used to offer low interest loans to farmers. When the farmers profited the bank would profit. And you know, it seemed like a good idea at the time. The day it opened the bank had two hundred applications for a total of $8 million in loans.
Then the First World War ended on 11 November, 1918. In a flash every industrialized nation slashed their budgets and stopped buying American wheat.  Farm prices collapsed. The 650, 000 citizens of North Dakota were hurting, and in order to cover its loan requests, the BND was forced to offer $10 million in bonds for sale. The Minneapolis-St. Paul bankers, who had lost their best customers to the BND, turned up their noses. They were determined the bank should fail. Faced with impending disaster, the Industrial Commission decided on a bookkeeping slight of hand. They ordered various state agencies and city governments, which were already required to have their money deposited in the bank, to loan the BND $10 million. The cash was never actually withdrawn, so nobody was actually out the money. But cash was available to make loans to the strapped farmers. And the bank of North Dakota had been saved.
It was a bridge too far for the old school Republicans. On April Fools day, 1919, three major players in state politics, Attorney General “Wild Bill” Langer, state Auditor Carl Kositizksy and Secretary of State Thomas Hall all resigned their membership in the NPL in protest. Publicly they blamed Townley's influence. Langer even called the father of the Non-Partisan League a liar. Resistance to the League solidified around The Independent Voters Association - except the IVA was anything but independent. Most of its money came from the Minnesota capitalist-industrial complex. So much money poured in that in November of 1919 the first issue of a 40 page monthly magazine appeared, “The Red Flame”, pounding home the message that the NPL were communists, intent on subverting capitalism in North Dakota. Newspapers took sides, and it became clear that the further west within the state, the stronger the NPL became, and feeding off the anti-German sentiment left over from the war, the further east you went the stronger the IVA became.
The IVA tried suing to invalidate the legislation which had created the Industrial Commission, claiming it violated the 14th amendment to the U.S. constitution. A North Dakota judge tossed the suit, and the State Supreme Court upheld that decision, saying it was an issue of taxation and thus a matter for the the elected officials, not judges. The IVA then appealed to the U.S. Supreme Court which heard the case in in April of 1920.  And in June the court admitted that things in North Dakota were getting pretty odd, but again, they refused to stick their noses into a taxation issue.
The primary campaign in 1920 was nasty, and vicious. There were charges that the IVA was bribing politicians, and the IVA managed to put a measure on the ballot to weaken the bank by allowing city or county governments to withdraw their money. Month after month, “The Red Flame” spewed out accusations against Frazier and the Non-Partisan League, charging incompetence and fraud in running the Bank of North Dakota. In the October Republican primaries Frazier beat “Wild Bill” Langer for Governor, but the NPL lost control of the North Dakota House to the IVA, and the bank lost capital when the ballot measure passed. Come November, the wounded Frazier defeated the Democratic candidate for Governor by a mere 5,000 votes.
Governor Frazier responded in December, during a special session of the legislature, when he introduced the “anti-liars” bill, making it a felony for a state employee to publish false statements about the bank. IVA politician Theodore “Two Bit” Nelson went hyperbolic to the Bismark North Star Dakotan newspaper, “This is the end of democracy. Nothing is sacred,” he pronounced What it was, was civil war within the Republican Party. Politics in North Dakota ground to a halt. Fist fights erupted periodically in the legislature between NPL and IVA Republicans. But the IVA had managed to turn one of the NPL's political reforms against it, collecting 73,000 signatures and forcing an October recall election on the three freshly re-elected members of the Industrial Commission; Frazier, Lemke and Hagen. At the same time a half dozen ballot measures were offered, any one of which would neuter or destroy the bank.
The vote was held on Friday, 28 October, and all three NPL members of the Industrial Commission were ousted. Frazier became the first Governor every recalled, by a margin of just 1%, barely 4,000 votes.  But the Bank of North Dakota survived, as every ballot measure meant to destroy it was defeated. Wrote the Dakotan newspaper, “It seems that the people want the bank and the mill but think that the IVA can do a better job of running them.”  In 1921, the IVA tried again to dismantle “Socialism” in North Dakota, and again every ballot measure intended to overturn the bank and the state run flour mill, went down to defeat. They never tried again. Both institutions are still very much alive and healthy today, if reduced in size and goals. But they remain a recognition that when corporations seek to exploit and dominate the people, the people have no choice but to incorporate themselves.
The year after being recalled as governor, the people of North Dakota elected Lynn Frazier to the United States Senate, where he served for 17 years. Arthur Charles Townley the man who splinted the Republican party, served a 90 day prison sentence in 1922 for discouraging enlistments in World War One. He resigned from the NPL, but he never stopped fighting for things he believed in. Without him, his Non-Partisan League remained a thorn in the side of the Republican Party until 1956. Since then they have annoyed the Democratic Party of the North Dakota, which remains a minority party in a state still filled with farmers and still dominated economically from Minnesota.
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Saturday, October 15, 2016

SINS OF THE FATHER

I have a theory about politics, and it goes like this: each generation fights its father's battles. The prime example of this turns out to be conspiracy’s step-child, Richard Milhouse Nixon. After his two brothers died of tuberculosis, “Tricky Dick” became an over achiever riddled by survivor's guilt who inherited his father's inferiority complex and explosive temper along with his mother's stoic martyrdom in the face of her husband's violence. I shall now pause for a round of applause from all amateur psychologists reading this blog. But to go a step further - this oversimplification explains how the only President forced to resign could still insist, long after the Watergate scandal brought him down, that “when the President does it, that means that it is not illegal”. But does that also apply to what you do to win the office? 
In 1968 there were half a million Americans draftees fighting in South Vietnam. The 12 year war had already killed 30,000 Americans, almost as many as died in the Korean War. Three hundred more Americans were dying every week.  And every week the Pentagon was spending $1.5 billion on a war President Lyndon Johnson was belatedly trying to end. The complication was that 1968 was also a Presidential election year. The war had grown so unpopular that in March, Johnson had withdrawn from the election, removing himself as an issue. And despite the blood and treasure spent in Vietnam by their party, the Democratic candidate, Vice President Hubert Humphrey, still held a slim lead in the polls over the likely Republican challenger, one time Vice-President Richard Nixon.
On Friday, 10 May, 1968 North Vietnam and the United States began secret talks in a Paris hotel on the Avenue Kleber (pronounced clay-bear). The first difficult issue to be decided was the shape of the table, because it really should have been three party talks. South Vietnamese President, Nguyen Van Thieu (above), had gambled his life, and the lives of everyone he loved, on defeating the communist Viet Minh guerrillas, controlled by North Vietnam. That struggle had so far cost South Vietnam over 100,000 military, and close to 200,000 civilian deaths. Thieu and his supporters had earned a place at the table in Paris. President Johnson wanted them there. But North Vietnam stubbornly refused to recognize Thieu's government, or even sit down at any shaped negotiating table with them. And Thieu agreed. He was worried the Americans might compromise him into a corner, allowing the communists to easily take power once the Americans left.
On Sunday, 12 July, 1968 another secret meeting took place, this one in Richard Nixon's 39th floor suite at the Pierre Hotel, just off Fifth Avenue on East 61st Street, in Manhattan. Nixon's co-hosts were his closest adviser John Mitchell, and Republican activist and unofficial leader of the Taiwan anti-communist lobby, Anna Chennault . The single guest, brought there by Mrs. Chennault, was the South Vietnamese ambassador to the United States, Bui Diem.  Both Chennault and Diem have left accounts of the meeting, at which Nixon assured Diem the South Vietnamese would get “better treatment from me than under the Democrats,” and that “his staff would be in touch with (Diem) through...Anna Chennault.”
Anna was the widow of American Lieutenant General Claire Chennault, commander of the “volunteer” Flying Tigers, American flyers who battled Japanese bombers over China before Pearl Harbor. After the war the general had set up the Flying Tiger Line, an air transport service based in Taiwan, and bankrolled by the CIA. When the 65 year old general died of lung cancer in 1958, he left his 33 year old widow a multimillionaire. She was brilliant in her own right, and a constant supporter of the man who had actually “lost” China to the communists, Generalissimo Chiang Kai-shek. Under Eisenhower, “The Dragon Lady” had become a powerful Republican fundraiser. Her sole drawback, in Nixon's own words,  was that, “she's a chatterbox.”
After the secret meeting in the Pierre, Diem became a regular at parties Anna hosted in her Penthouse in the Watergate complex in Washington, D.C. And she became a regular in Saigon, capital of South Vietnam. There she talked directly with President Thieu. What they talked about is not recorded, but Thieu began to take a harder line regarding the now weekly secret Paris talks. Nixon was aware of the lack of progress in Paris, thanks to Bryce Harklow, an Eisenhower aide and self described “double agent”, who had stayed on through the Kennedy and Johnson administrations. And as the election approached. Harlow told Nixon, Johnson was planning an “October Surprise” and a “Halloween Peace”, to help make Humphrey  President. Nixon had no doubt it was true, thanks to his other mole, Professor Henry Kissinger.
Since he was very smart, as far back as 1966 Harvard Professor Henry Kissinger (right, above) became convinced any military victory in South Vietnam would prove useless, unless it also produced “a political reality that could survive our ultimate withdrawal”.  Because of this he helped start the two party Paris talks.  But he was also intensely ambitious, and in August, when the North Vietnamese ordered their troops in the two northern provinces of South Vietnam to stand down, Kissinger warned Nixon (left, above) that the war might be coming to an abrupt end, thus invalidating Nixon's twin campaign ads of “Peace With Honor”, and “Nixon's The One” - the who would end the war. John Mitchel immediately called Anna Channault (center, above).
Anna said latter that Mitchell called her “almost every day” that summer,, always with the same message – don't let Thieu go to Paris.  In her autobiography Anna explained, “My job was to hold him back..”  Negotiations with North Vietnam might be part of Kissinger's “political reality”, but Anna assured the “Little Dictator” (above), that Nixon would secure a better peace for South Vietnam. She later wrote “Throughout October 1968 Thieu tried to delay... as long as possible to buy time for Nixon.”  Thieu would later tell Ambassador Diem that “a Humphrey victory would mean a coalition government in six months.” And, of course, an end to the war.
But Johnson (above) had heard hints of Nixon's back channel, from Florida Democratic Senator George Smathers, who was friends with both Johnson and Nixon. And the President was also warned about a stock tip being offered by Wall Street money man and Nixon supporter, Alexander Sachs. Sachs was quoted by Walt Rostow as saying a quick peace was unlikely because Nixon would,
“incite Saigon to be difficult and Hanoi to wait.”  In response Johnson ordered the National Security Agency and legendary director of the F.B.I,  J. Edgar Hoover, to bug his own government, including ambassador to South Vietnam, Ellsworth Bunker, and the Nixon campaign's leadership. Hoover won the race for the dirt, quickly producing a call on Bunker's private phone from Anna Channault, who urged the ambassador to tell Thieu to “Just hang on through the election.”
Finally, on 31 October, 1968, Johnson announced on national television that because of recent conciliatory moves by North Vietnam (the stand down in the northern provinces), he was halting American bombing.  Johnson also went public about the Paris peace talks, next to be held the day after the American election. But he was able to announce only that South Vietnam was “free to participate” in the talks as well. Two days earlier, President Thieu had informed Johnson that he would absolutely not be attending the Paris talks, relying instead on Nixon's promise of a better deal after his victory in November.
Two days later, on 2 November, Johnson called the Republican Senate Minority Leader, gravel voiced Everett Dirkson. The recording of that call is in the L.B.J. Presidential Library. On the tape Johnson quoted from Anna Channault's call to Bunker, so Dirkson would have no doubt he had the evidence. He then told the Republican, “They oughtn’t be doing this. This is treason.” Dirkson replied, “I know,.” and promised to call Nixon. Johnson then brutally drove his point home. “They’re contacting a foreign power in the middle of a war...and if they don’t want it on the front pages, they better quit it.”
A day later, Nixon called Johnson and smoothly lied. He assured Johnson, concerning sabotage of the Paris peace talks,  “There’s absolutely no credibility as far as I’m concerned.”  But unknown to Nixon it was caught on tape by the National Security Agency. The NSA also had a recording of a phone call between Republican Vice Presidential candidate Spiro Agnew and Ann Channaut discussing her lobbying of Thieu. With still 2 days before the election, Johnson might have released some or all of those recordings. After conversations with his staff he decided not to do so, because it would taint the credibility of whoever won the election.  For the good of the nation, Johnson kept his mouth shut.
Nixon won the Tuesday, 5 November, 1968 popular vote by just over 500,000 – about 0.7%,, but he took the electoral college decisively, with 31 votes to spare, 301 to 191 for Humphrey,  During November and December, despite pleadings from Johnson to push Thieu to come to Paris, Anna Channaut kept up reassuring The South Vietnamese President to hold out until Nixon took the oath of office in January.  Once elected, President Richard Nixon did begin withdrawing American troops, but he also funded an increase in the South Vietnamese Army, from 800,000 in 1968, to a high of 110,000 in 1973 – just before their collapse in the face of a North Vietnamese offensive. What happened in 1973 was Watergate, a scandal which increasingly consumed Nixon's time and political power. And that started with the failed Watergate break in on 17 June, 1971
On that day the White House recording system heard President Richard Nixon ask his chief-of-staff “Bob” Halderman a simple question:”Do we have it?”  He had ordered the break in of the Democratic headquarters, searching for Lyndon Johnson's copy of Anna Channault and Spiro Agnew's phone calls from the fall of 1968. He was worried it might be released to defeat that his re-election in  November of 1972. And when Halderman hinted there might be a copy at the Brookings Institute on Long Island, Nixon ordered, “Goddammit, get in and get those files. Blow the safe and get it.” Two weeks later, still demanding action from his wary staff, Nixon told Halderman, “Talk to Hunt. I want the break-in.” And thus began a two year search, largely conducted by ex-CIA agent E. Howard Hunt and his “Plumbers” unit, to find the record of Richard Nixon's duplicity on the Vietnam War, and failing that, to collect dirt on anyone who might have the file, such as Daniel Ellsberg, the source of the “Pentagon Papers”, and a logical repository for that tape . But the tape and Johnson's files were no longer in any of the places Nixon was looking.
Just before he left the White House, Lyndon Johnson had entrusted the file to Walt Rostow, who kept it with his personal papers. Rostow knew what was in the file. And when the Watergate scandal took flame over the summer of 1973, he wrote a memorandum (above) to be included in the file, and then wrote on the cover, “Top Secret. To be opened by the Director, Lyndon Baines Johnson Library, not earlier than fifty (50) years from this date, June 26, 1973.”  But the library waited only twenty years, and then began the protracted process of declassifying the contents. That took another twenty years, before the great question of the Watergate scandal was finally answered  - why did Nixon send a collection of ex-CIA Cuban-Americans into the DNC headquarters on 17 June, 1972?  And the answer was; the 27,257 Americans who died in Vietnam, the tens of thousands of wounded who suffered during the 5 years Richard Nixon kept the war going for his personal benefit.
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Thursday, October 13, 2016

PERVERSION FOR PROFIT


“If pro is the opposite of con, what is the opposite of Congress?”
Will Rogers
I find it curious that Charlie Humphrey Keating Jr (above) spent his adult life crusading against pornography, which he called a “Perversion for Profit”. At the same time he saw no perversion in profiting from duping naive investors, even telling his sales agents, “...the weak, meek and ignorant are always good targets.” Charlie did not invent hypocrisy, nor the investment scam, nor even political graft. But when asked if he had bought five U.S. Senators, Charlie responded forcefully, “I certainly hope so.” It was Charlie's sociopathic self-serving arrogance which made him famously wealthy and infamously despised. And then Charlie got his hands on a bank.
A holding company is a thing where you hand an accomplice the goods while the policeman searches you.”
Will Rogers
Once upon a time in America there were two kinds of banks, commercial banks, with few restrictions on their investments, and “Savings and Loans”. Federal regulations kept S&L's the dull, cautious bedrock of private home ownership. But even real estate suffers the boom and bust of capitalism, better known as the “business cycle”. So politicians, following an ideology of greed, created the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980, which among other things, lifted the limit S&L's were allowed to invest in things other than homes. In the decade after, S&L's went from 53% of their money being in home loans, to less than 30%. Seeking profit Savings and Loan bankers then invented the Certificate of Deposit, or CD's, which allowed them to pay higher interest rates and compete with commercial banks for investors. But paying higher interest rates meant each new customer also cost more. In the world of academic economics this is known as an “asset-liability mismatch”. In Charlie Keating's world this was known as a business opportunity.
“Don't gamble. Take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it.”
Will Rogers
Charlie had arrived in Phoenix, Arizona  (above) in 1976, having been chased out of Cincinnati, Ohio by the Federal Securities and Exchange Commission. Once in town he proceeded to duplicate the behavior which had gotten him into trouble in Ohio, metamorphosing a faltering home construction company into American Continental Corporation, a holding company with maze of 54 divisions (and a few secret overseas operations), $6 billion in assets, 2,500 employees and a couple of corporate jets. When federal regulators started sniffing around Charlie even got economics guru Alan Greenspan to write him a letter of recommendation. Forbes Magazine, although impressed with Charlie's explosive growth, noted, “It seems almost impossible to find anyone who actually likes Charlie Keating.” His own brother admitted that Charlie was impatient and aggressive - but he left out, greedy. And then in 1980, Ronald Reagan won the White House, and geed became “good”, and deregulation, such as DIDMCA, became the mantra of the day. In 1984, Charlie used American Continental to buy Lincoln Savings Bank of California, for $51 million. He fired the management wholesale, and converted it into his personal bank.
“Big business don’t go broke any more. The minute it looks bad for them, they combine with something else and issue more stock.”
Will Rogers
Three years later an audit by three investigators for the San Francisco office of the Federal Home Loan Banks Board found that Lincoln had unreported losses of $135 million, and had exceeded the new looser limit on risky investments by $600 million. But what Charlie had learned from his first run-in with financial regulators back in Ohio was that it paid to have friends in high places. He had made over $1 million in political contributions to five U.S. Senators – Alan Cranston (D-Ca), Dennis DeConcini (D-Az), John McCain (R-Az), John Glenn (D-Ohio) and Donald Riegle (D-Michigan). Charlie now insisted that his “Keating Five” have a joint sit down with the three investigators from the FHLBB.
“Ancient Rome declined because it had a Senate. Now, what's going to happen to us, with both a House and a Senate?”
Will Rogers
On Thursday, 19 April, 1987, the investigators were flown to Washington to be intimidated by the five senators in person. DeConcini explained that “Our friend at Lincoln...is a big employer and important to the local economy.” Former Astronaut and former Marine, Senator John Glenn, had little patience for such niceties. “To be blunt”, he told the bureaucrats,. “You should charge them (Lincoln Savings) or get off their backs.” The regulators worked up the courage to explain that it appeared money was being siphoned out of Lincoln to fuel false profits at American Continental. That converted their audit into a criminal investigation. The Senators backed off and rushed to tell Charlie.
“There ought to be one day - just one - when there is open season on senators.”
Will Rogers
Charlie was not happy "his" senators had not shut down the investigation. . He even called Senator John McCain a “whimp” to his face, and went looking for politicians more willing to do his bidding. When the San Francisco regulators persisted in recommending that Lincoln Savings be seized, the Reagan administration appointed a new head of the FHLBB, who forgave Lincoln for any past violations and started a brand new audit, this time run from Washington, D.C., where it could be controlled.  Charlie always said if they just relaxed the rules, the Savings and Loan industry could be “the biggest moneymaker in the world.”
“A lobbyist is a person that is supposed to help a politician make up his mind—not only help him but pay him.”
Will Rogers
It was at this point that the tellers at Lincoln Savings were ordered to begin pushing their customers to switch their savings from insured CD's to the uninsured American Continental bonds. Twenty -three thousand eventually fell for this sales pitch. Thanks to the delay in moving against him, Charlie had now bypassed the bank entirely. He was siphoning cash directly out of the customers' pockets into his. Federal Deposit Insurance Corporation chairman Seidman would later call this “one of the most heartless and cruel frauds in modern memory.”
“The short memories of the American voters is what keeps our politicians in office.”
Will Rogers
By December of 1988, even the bought politicians had become convinced Charlie was a fraudster. In January they finally ordered him to stop transferring money out of Lincoln savings. Three months later, both American Continental and Lincoln Savings and Loan went bankrupt, and those 23,000 dupes, who on the advice of the tellers and managers at their neighborhood bank, had invested $288 million in uninsured Lincoln bonds, lost it all. Among the many suicides this crime produced, was that of Anthony Elliott, who slit his wrists after losing his life savings - $200,000 – to feed Charlie's ego. Anthony's Thanksgiving Day 1990 note asked, “My government is supposed to serve and protect, but who?" He then answered himself, writing, "Those who can gather the most savings from retired people. . . . It takes billions to fill the pockets of spend-o-crats”.
“I tell you folks, all politics is applesauce.”
Will Rogers
The FDIC had to shell out 3.4 billion in tax payer dollars to cover the insured part of Charlie's looting of Lincoln Savings. Finally, in December of 1991, the state of California convicted Charlie of 17 counts of fraud, racketeering, and conspiracy. In January 1993, the feds convicted him of 73 counts of fraud, racketeering and conspiracy.  In 1994 the Resolution Trust Corporation, which had been created to clean up the Reagan deregulation mess, won the largest judgement against a private person in American history - $4.3 billion, against Charlie Keating.  Still, somehow, after serving just 4 ½ years in jail, Charlie Keating was released, free and clear.  As the authors of the 1993 book wondered, "He did not simply rob a bank, he broke it with his dreams... If he (was) such a devout communicant of his faith, why did he peddle hundreds of millions of dollars' worth of junk bonds to old people when he knew his empire was in serious jeaopardy?"  After living with his daughter in Phoenix, Arizona for a few years, Charlie went back into businss. Successfully. He died in March of 2014, still convinced that if the government had just left him alone, all his investors, even Anthony Elliot, would have been rich.
“There are three kinds of men. The ones that learn by readin’. The few who learn by observation. The rest of them have to pee on the electric fence for themselves.”
Will Rogers
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