The Book of Bastards

by Brian Thornton

  That sort of “chamber-of-commerce” activity is something every congressman has done at one time or another. Stuffing your pockets full of cash and then wondering whether the resulting bulge ruins the line of your suit, on the other hand, not so much!

  “I do not consider myself a hero … what have we come to if turning down a bribe is considered ‘heroic’?”

  — Senator Larry Pressler

  73

  MICHAEL DEAVER

  The Medium Is the Message (1938–2007)

  “I always imagined that when I died there would be a phone in my coffin, and at the other end of it would be Nancy Reagan.”

  — Michael Deaver

  Michael Deaver was a California lobbyist and political operative in Ronald Reagan's camp. He consulted on Reagan's run for governor of California, as well as his first and second presidential campaigns. Deaver also saved Reagan's life during the 1976 campaign by performing the Heimlich maneuver after the candidate had begun to choke on a peanut.

  After Reagan won his second term in 1980, he had to coax Deaver into leaving California to work in his White House. Reagan felt so strongly about having Deaver onboard that he offered him the plum job of deputy chief of staff with responsibility for setting the president's schedule of speaking engagements and attendance at public events, and in charge of overseeing public relations efforts; it was a dream job for a one-time lobbyist with ambitions to be an even more powerful lobbyist after his public service was over. It gave him a level of access to the president only enjoyed by the other two members of what the press dubbed Reagan's “Troika” of closest advisors, James A. Baker III and Ed Meese.

  As part of the “Troika,” Deaver served as White House deputy chief of staff under Chiefs of Staff James A. Baker III and Donald Regan. He became so essential that Reagan compared Deaver's May 15, 1985, departure to start his own lobbying firm to “an amputation.” But resign he did and he founded Michael K. Deaver, Inc. Meanwhile, he still received the (confidential) president's daily schedule and retained a White House pass.

  Stemming from a March 3, 1986, Time magazine cover story, Deaver and his firm came under investigation for violations of the Ethics in Government Act of 1986. The legislation prohibits senior government officials from lobbying the government until two years after their departure. At his trial, Deaver claimed that his alcoholism caused memory blackouts that made him forget calls he made to government officials. The judge overseeing the case, however, barred this defense on the grounds that it was not substantiated by expert testimony. After twenty-seven hours of deliberations, Deaver was convicted of three counts of perjury relating to statements he made regarding lobbying on behalf of TWA, the Republic of South Korea, and Puerto Rico. Originally sentenced to three years in prison, Deaver eventually paid a $100,000 fine, did 1,500 hours of community service, and served three years' probation; of course, he didn't serve a day of his jail sentence.

  BASTARD PHOTO-OP

  These days, everyone knows what the phrase “photo-op” means. But Deaver coined the phrase “photo opportunity” and used it to supreme advantage getting Reagan's face in front of the public. Time magazine called him the “vicar of visuals.” Deaver later said of his work: “I've always said the only thing I did is light him well. My job was filling up the space around the head. I didn't make Ronald Reagan. Ronald Reagan made me.”

  To Deaver's credit he refused an offer of a pardon from Reagan before the president left office. He died of cancer in 2007.

  “Looking back, I guess one tip-off was that he really enjoyed the trappings of power. His office contained dozens of photographs, framed in silver, of Deaver with kings, queens, and prime ministers, many of whom he had prevailed on for autographs. There was a lot of the small-town kid from Bakersfield, California, in him, and I suppose he just got carried away with his own importance.”

  — Larry Speakes

  74

  THE S&LS

  A Gang of Rogues

  “The banking problems of the 80s and 90s came primarily, but not exclusively, from unsound real estate lending.”

  — Former Federal Deposit Insurance Corporation (FDIC) Chairman L. William Seidman

  As of this writing the memory of the Big Bank Bailout of 2008–2009 was still fresh. The fallout from this whopper of a government spending spree has sparked all manner of public outrage; ordinary citizens often ask jokingly, “Where's my bailout?” Banks that have been deemed “too big to fail” have received record amounts of federal loan money in order to stay afloat. Others like Goldman Sachs are already repaying their bailout money and once again handing out absurd payment packages to their highest-achieving traders. Many people who were enjoying the boom times of the early Bush-43–era deregulation of Wall Street banking have had plenty of reason to grouse as they watch their investments dry up. And yet it's not as if this sort of bailout of the improvident rich by the taxpayers hasn't happened before; it actually occurred recently, too.

  Ladies and gentlemen, we give you the S&L Scandal of the late 1980s, complete with some very familiar family names!

  Prior to the recent Wall Street bank bailouts of 2008 and 2009, the S&L Scandal was the largest taxpayer-funded financial institution bailout in U.S. history. It cost over $160 billion; nearly all of it was borne by the taxpayers. The bailout added to the ballooning budget deficits in the early 1990s; many see it as the main cause of the 1990–1991 recession (and by association, of President George H. W. Bush's election loss in 1992).

  US S&Ls (short for “Savings & Loan”) were similar to British “building societies.” They were nonprofits that primarily, if not exclusively, made mortgage loans to ordinary working people. They were originally called “building and loans” and, in the prewar period, were most popular in the Eastern and Midwestern United States.

  MORE BASTARD BUSHES!

  The S&L bastard dust-up reads like a veritable Who's Who of United States Senators and Ne'er-Do-Well Scions of Politically Powerful Families, and it includes several Bushes! Future Florida governor Jeb Bush defaulted on a $5 million real estate loan; he later paid $500,000 to “settle” it once he'd had the property reappraised. And younger brother Neil Bush was the director of Silverado Savings and Loan when it failed. The FDIC found that he had engaged in “multiple conflicts of interest,” and sued to recover millions of dollars he allegedly “loaned” himself. For his part, Neil Bush maintained that “self-serving regulators” were going after him because he was the son of the president. He later paid $50,000 to settle the FDIC's lawsuit, a pretty cheap buyout in light of the millions he mishandled while running the repository of so many people's savings into the ground. Nice, huh? And here you thought that you already knew the names of all of the bastards in that generation of the Bush family!

  The actual causes (and there were more than one) of the S&L crisis are still under debate. Many blame the rampant deregulation of the Reagan era. It allowed many S&Ls to get into the same business as banks without the same credentials. In fact, many S&Ls couldn't have even made the grade under the same rigorous regulatory oversight that governed the banks. Deregulation also allowed these S&Ls to become for-profit, make riskier real estate loans, and invest in businesses in which they were not experienced.

  Another major cause of the crisis was a practice known in the business as “over-leveraging.” Simply put, S&Ls lent far more money than was prudent when interest rates were high in the late 1970s.

  75

  CHARLES KEATING

  Millionaire Owner of the “Keating Five” (1923– )

  “The Senate is a really small club, like the cliché goes. And you really did have one-twentieth of the Senate in one room, called by one guy, who was the biggest crook in the S&L debacle.”

  — William Black

  There is a special place in Hell reserved for hypocritical bastards like Charles Keating. He swam at the All-American level in college and is now grandfather to five-time Olympic gold medalist Gary Hall, Jr. He was a happily married Ar
izona businessman and anti-pornography activist during most of the 1950s and 1960s. Today Keating is best known for swindling elderly investors and paying off several U.S. Senators to try and keep out of trouble with federal regulators.

  BASTARD AS “ASTERISK”?

  Arizona senator John McCain has referred to the “Keating Five” scandal as “my asterisk” and to his attempts to help Keating avoid investigation by federal regulators as the “worst mistake of my life.” This of course after Keating made countless campaign contributions to McCain. And after McCain's wife and father-in-law invested over half-a-million dollars in one of Keating's land deals. And after McCain, his wife, and his daughter traveled on Keating's dime no less than nine times, once on his corporate jet! (McCain later paid Keating for the cost of his family's travel.)

  The so-called “Keating Five” were five U. S. Senators — Alan Cranston (D–CA), Don Riegle (D–MI), Dennis DeConcini (D–AZ), John Glenn (D–OH), and John McCain (R–AZ) — who were implicated in a scandal involving Keating and his failed Lincoln Savings and Loan Association.

  In 1984, Keating took over the Lincoln S&L, hoping to take advantage of recent deregulation. The changing laws would allow his business to invest its depositors' funds in high-risk real estate and speculative junk bonds. In 1985, however, the Federal Home Loan Bank Board (FHLBB) limited the amount of those types of investments to ten percent of the funds on deposit.

  Keating fought back when the FHLBB began investigating Lincoln. He commissioned a private study by future Fed Chairman Alan Greenspan who said direct investments were a boon to S&Ls, not a risk. Keating also lobbied the Reagan administration to name his friend Lee H. Henkel, Jr. to the FHLBB in a recess appointment — which does not require Senate confirmation. Henkel resigned shortly after it was revealed that he had several large loans from Lincoln.

  The Keating Five met privately with FHLBB Chairman Edwin J. Gray for two hours on April 9, 1987. They tried to pressure Gray to end the investigation of Lincoln. The Lincoln S&L later collapsed and cost U.S. taxpayers over $3 billion.

  When news of the scandal broke, the Keating Five were investigated by the Senate Ethics Committee. Cranston received the harshest punishment meted out to the five: a reprimand. Riegle and DeConcini were rebuked for “acting improperly”; Glenn and McCain were criticized for “poor judgment.”

  Three of the five — Cranston, Riegle, and DeConcini — declined to run for reelection after the scandal. Glenn has since retired. McCain is still in the U.S. Senate; he won the 2008 Republican presidential nomination, but ultimately lost the presidential election to Barack Obama.

  And Keating? The Chicago Tribune had quite a bit to say about the scandal:

  “To say that Charles Keating is a complex man seems a gross understatement. Some see him as an aggressive man who got desperate when the real estate market bottomed out and crossed the line between ‘business as usual’ and fraud. Others see him as a con artist who finally got caught, a hypocrite who masked his greed with phony piety.”

  Either way, he got what was coming to him. The legal consequences of his actions included millions in fines and four-and-a-half years in prison. He maintains his innocence to this day. Bastard.

  “[John McCain] is a wimp.”

  — Charles Keating

  76

  LYN NOFZIGER

  The Wedtech Wonder (1924–2006)

  “I cannot show remorse because I do not believe I am guilty.”

  — Lyn Nofziger

  There is no question that President Ronald Reagan was personally honest. It was one of his many admirable qualities. And yet, as the previous chapters have illustrated, he did not always surround himself with people who reflected his own strongly held personal values. Take Franklyn C. “Lyn” Nofziger, for example.

  THE QUOTABLE BASTARD

  Nofziger was always quotable, especially when it came to discussing former Republican presidents. His most famous zingers include:

  1. “I sometimes lie awake at night trying to think of something funny that Richard Nixon said.”

  2. “[Nixon] and Reagan were not at all alike, because Reagan is an optimist and Dick Nixon wasn't. Yet in some ways they were alike. Neither really liked to talk on the telephone, for instance. And, in a lot of respects, both of them were very much loners.”

  3. “I'm not a social friend of the Reagans. That's by their choice and by mine. They don't drink enough.”

  A former newspaper reporter and editor, Nofziger served as Reagan's press secretary while he was governor of California and as one of Nixon's advisors. With Reagan in the White House in 1981, Nofziger served his old boss as an “advisor” in his new administration.

  But Nofziger later left the White House to work as a lobbyist for the defense contractor Wedtech. And that was a problem. By the eighties, the folks at Wedtech were busy bribing public officials to land favorable consideration for Department of Defense contracts. To further complicate matters, Nofziger had steered a multimillion-dollar contract in Wedtech's direction before he left the Reagan White House. Here's the background.

  The Wedtech Corporation was founded in the Bronx by a Puerto Rican immigrant named John Mariotta. The baby stroller manufacturer soon became a principal employer in an economically depressed part of New York City.

  Mariotta brought in a business partner, Fred Neuberger, who later became majority shareholder. Even so, Wedtech claimed that Mariotta was still the owner; with a Puerto Rican man at the helm, it could continue to take advantage of no-bid Department of Defense contracts that were awarded to minority-owned firms. The company later began paying bribes in the form of company stock to state and federal government officials in order to get the contracts.

  When an investigation ensued, numerous Wedtech executives pleaded guilty to bribery and conspiracy charges. They also began rolling on the government officials they had bribed. One of these officials was Mario Biaggi, a former New York City police officer who was first elected to Congress for the Bronx in 1969. He was convicted on fifteen federal felony charges including receiving bribes and obstruction of justice. Former U.S. Attorney General Edwin Meese III was also investigated for receiving bribes from Wedtech.

  And then of course there was Nofziger, who was accused of improperly steering a $32 million small-engine contract to Wedtech in return for a job lobbying for the company. Nofziger was charged with violating the Ethics in Government Act which prohibits former government officials from lobbying the government within two years of their departure. Nofziger was convicted, but the verdict was overturned on appeal; the U.S. Supreme Court allowed the appellate court's decision to stand.

  Wedtech declared bankruptcy and went out of business in 1987. Nofziger went on to run political campaigns for the likes of Pat Buchanan and Steve Forbes. He never spent a day in jail.

  77

  OLIVER NORTH

  Hiding Iran-Contra Behind Fawn Hall's Skirts (and Her Underwear!) (1943– )

  “I thought using the Ayatollah's money to support the Nicaraguan resistance was a neat idea.”

  — Oliver North

  United States Marine Corps Lieutenant Colonel Oliver “Ollie” North graduated from the U.S. Naval Academy and was decorated for his service in Vietnam. President Ronald Reagan named North director for political-military affairs in 1981. Even covered with all those honors, North is seen as the main culprit of the so-called Iran-Contra Affair, though he was never convicted.

  The Iran-Contra Affair began after Reagan officials agreed to sell American arms to Iran despite an arms embargo. At first, the weapons sales bought the release of American hostages kidnapped in Lebanon between 1982 and 1992. But weapons were eventually sold for money, too. The Americans then passed these profits on to anticommunist Contra rebels fighting Nicaragua's socialist Sandinista government.

  North was one of the middlemen who brokered the deal, and he came up with the idea of giving the money to the Contras. The Boland Amendment to the 1982 Defense Appropriations Act cut off fu
nding to the rebels, but North went forward with the plan anyway. He used a shell company to send the money to the rebels.

  The Lebanese magazine Ash-Shiraa first broke the scandal on November 3, 1986. This prompted North and his secretary Fawn Hall to begin editing, destroying, and removing records related to the affair. Reagan publicly fired Hall and North on November 25, 1986.

  North invoked the Fifth Amendment before he eventually gave lengthy and televised testimony before Congress in 1987. Nevertheless, he was indicted on twelve charges and convicted of bribery, lying to Congress, and unauthorized destruction of documents. The guilty verdicts were later overturned on appeal because of concerns relating to the use of his immunized Congressional testimony at his trial.

  BASTARD GETTING INTO HIS SECRETARY'S PANTIES

  In a well-publicized incident, Hall snuck secret government documents out of North's office by hiding them in her boots, under her skirt, even in her underwear. Hall was very attractive, and late night talk show hosts got a lot of mileage out of jokes about how Ollie North had found new ways to get into a woman's pants. Hall was later granted protection from prosecution in exchange for her testimony against North in his 1989 trial. Her official statements included discussion of the underwear in which she had smuggled documents.

  Like Watergate burglar G. Gordon Liddy before him, North used the notoriety stemming from his role in the Iran-Contra affair to build cult-hero status among the right wing. Also like Liddy, he cashed in on it. After a failed run as a Republican for a seat representing Virginia in the U.S. Senate, North took to the airwaves. He hosted his own right-wing talk show for several years. He can still be found peddling his skewed notions on politics and patriotism (go figure). He hosts War Stories with Oliver North on the Fox News Channel and appears as a frequent “expert commentator” on other shows. He is also the bestselling author of a number of books.