The Senate Ethics Committee opened politically charged hearings Thursday into links between five senators and the owner of a failed savings and loan, and the panel's chairman bluntly told the lawmakers that many people believe "you sold your office."
Four of the so-called Keating Five looked on as Sen. Howell Heflin said, "many of our fellow citizens apparently believe that your services were bought by Charles Keating, that you were bribed, that you sold your office, that you traded your honor and your good names for contributions and other benefits."Sens. John McCain, a Republican from Arizona, and Democrats John Glenn of Ohio, Donald W. Riegle Jr. of Michigan and Dennis DeConcini of Arizona each listened intently as Heflin spoke in his gravelly Southern accent. Sen. Alan Cranston, D-Calif., who is undergoing prostate cancer treatment, did not attend. All five deny any wrongdoing.
Committee counsel Robert Bennett jostled a boxed puzzle before the committee members as he began his opening statement, saying he would provide them with a picture that later pieces of evidence would fill in.
Bennett said he did not contend it was improper for the senators to hold meetings with federal regulators, but that it was up to the panel to decide whether their actions were improper. He said "there can be no doubt" that the intent of each of the five senators was to help Keating when they met with federal regulators in 1987.
The five senators received a total of $1.3 million in campaign contributions or donations to their favored causes from Keating and his associates. All contacted federal regulators on behalf of Keating at a time when the government was considering whether to seize the Lincoln Savings and Loan Association, a thrift institution based in Irvine, Calif.
The thrift later collapsed at an estimated cost to the taxpayers of $2 billion.
Heflin told the five they would have the chance to say whether the donations "influenced your actions in any way."
Meanwhile, thrift regulators demanded a record $6.8 billion from Drexel Burnham Lambert Inc. for alleged junk bond fraud. The collapsed investment firm says it's being made a scapegoat for the savings and loan debacle.
The claims filed in federal Bankruptcy Court on Wednesday accuse Drexel and its former junk bond chief, Michael Milken, of "plundering" more than 40 failed thrifts through racketeering, fraud, bribery and numerous other crimes.
The allegations brought by the Federal Deposit Insurance Corp. and the Resolution Trust Corp. are by far the largest damages sought in the S&L crisis, which is expected to cost taxpayers more than $500 billion over 30 years.
They also, for the first time, pin much of the blame for the crisis on Drexel.