Precedents

July 8, 1993


Photo by Terry Ashe/Time Life Pictures/Getty Images

At first the strategy appeared to work, but by early 1984 a new pattern was emerging—one marked by profligate lending and massive fraud. Federal efforts to rein in rogue thrifts were met with resistance and ridicule. To head off proposed re-regulation, Keating enlisted the support of powerful politicians and heavyweights like Alan Greenspan.

As Lincoln’s loans and investments soured, however, bank examiners uncovered sham transactions, diverted funds and a massive junk bond scheme targeting elderly depositors. Keating was convicted—first of fraud in California state court, then of racketeering in federal court—his name forever linked to an S&L crisis that left taxpayers on the hook for $125 billion.

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