Will Charlie Keating ride again? Congress is once again looking at banking deregulation. Will it ignore the lessons of the past? - Charles H. Keating Jr. and the Lincoln Savings and Loan scandals of the 1980s

All of the Four (except Glenn, whose former chief of staff had been hired by Keating at a princely salary) had received handsome contributions from Keating. The group gathered in DiConcini's office at the senator's invitation. During the meeting, DiConcini held on his lap a memorandum that outlined Keating's terms and conditions, as though Keating were a sovereign nation. If Gray would call off his dogs and stop writing new rules, DiConcini explained, Keating would agree to make some home loans. Gray, though shaken by this exhibition of Keating's raw political power, refused.

But Keating had many more strings in his bow. To rid himself of his tormentor, he tried to hire Gray away from the Bank Board; Gray declined. Next, Keating engaged the services of Alan Greenspan, then an economist in private practice, as a paid flack. The future chairman of the Federal Reserve prepared two remarkable documents. In the first, he announced that Lincoln was a new, innovative, and soundly-run institution that "poses no foreseeable risk to FSLIC" In the second, he analyzed a number of other new, innovative, and soundly-run S&Ls and blessed their work. Not long after, all the thrifts on Greenspan's list had failed but one, and the survivor--although Greenspan didn't seem to know it--was not a thrift.

Keating pressed on. The Federal Home Loan Bank Board had three members, Gray and two others. When two seats became vacant, Keating put forward his own candidates, Professor George Benston, another of his paid academic flacks, and Lee Henkel, a Georgia lawyer who was involved in number of poorly performing enterprises to which Lincoln had loaned millions. Benston didn't make the cut, but the Reagan Justice Department gave Henkel a clean bill of health. During his brief tenure on the Bank Board, Henkel proposed precisely one new regulation. Out of the 3,000 S&Ls in the land, it would have benefited just two, one of which was Lincoln. (Gray believed that Henkel was unaware of the other one.) Shortly after Sen. William Proxmire revealed Henkel's relationship with Keating and Lincoln, however, Henkel declared that he was fed up and resigned.

Still, things were looking up for Charlie Keating. Gray's term expired, and he was succeeded by M. Danny Wall. Wall was a former top aide to Sen. Jake Garn, the co-author of Garn-St. Germain, and a considerably more Keating-friendly regulator. Wall's dealings with Keating are a study in creative regulation. In an unprecedented move, Wall allowed Keating to try to change his primary regulator from the hated San Francisco Home Loan Bank to the one in Seattle. At a meeting with Seattle regulators, Keating offered to effect the transfer by establishing a bogus headquarters at a Utah thrift within Seattle's district, which he volunteered to purchase on the spot with a personal check. Seattle was not amused. The transfer did not take place.

Nonetheless, Keating was able to negotiate a memorandum of understanding (MOW) with Wall's Home Loan Bank Board. It was, William Black, acting counsel for San Francisco and the former deputy director of the Bank Board, told the House Banking Committee, "the worst so-called enforcement document in history.... The Agreement and the MOU were a virtual cease and desist order...against the Bank Board."