Alan Greenspan, a private economist at the time, played a significant role in the Keating Five scandal, which involved the improper intervention of five United States Senators on behalf of Charles Keating, Jr., chairman of Lincoln Savings and Loan Association. Greenspan’s involvement and support for Keating’s position were seen as attempts to influence the Federal Home Loan Bank Board’s (FHLBB) investigation into Lincoln Savings and Loan Association.
Key Facts
- Alan Greenspan’s involvement: Alan Greenspan, who was a private economist at the time, provided a study that supported Charles Keating’s argument that direct investments were not harmful. This study was used by Keating to oppose the regulations imposed by the Federal Home Loan Bank Board (FHLBB) on Lincoln Savings and Loan Association.
- Support for Keating: Greenspan’s study and his support for Keating’s position were seen as an attempt to influence the FHLBB’s investigation into Lincoln Savings and Loan Association. Keating had made significant contributions to various U.S. Senators, including the Keating Five, and called on them to help him resist regulatory actions against his institution.
- Influence on President Reagan: Keating also managed to get President Ronald Reagan to make a recess appointment of a Keating ally, Lee H. Henkel Jr., to the FHLBB. This appointment was seen as an attempt to further influence the regulatory process.
- Impact on the investigation: The actions of Keating, including his connections to influential individuals like Greenspan, raised concerns about the integrity of the investigation into Lincoln Savings and Loan Association. The investigation took a long time, and Keating wanted the senators to intervene with the FHLBB on his behalf.
Greenspan’s Support for Keating
Greenspan provided a study that supported Keating’s argument that direct investments were not harmful. This study was used by Keating to oppose the regulations imposed by the FHLBB on Lincoln Savings and Loan Association. Keating had made significant contributions to various U.S. Senators, including the Keating Five, and called on them to help him resist regulatory actions against his institution.
Influence on President Reagan
Keating also managed to get President Ronald Reagan to make a recess appointment of a Keating ally, Lee H. Henkel Jr., to the FHLBB. This appointment was seen as an attempt to further influence the regulatory process.
Impact on the Investigation
The actions of Keating, including his connections to influential individuals like Greenspan, raised concerns about the integrity of the investigation into Lincoln Savings and Loan Association. The investigation took a long time, and Keating wanted the senators to intervene with the FHLBB on his behalf.
Greenspan’s involvement in the Keating Five scandal highlights the potential for conflicts of interest and the influence of special interests in shaping regulatory decisions. It also raises questions about the role of private individuals in influencing government investigations and the importance of maintaining the integrity of regulatory processes.
Sources
- https://en.wikipedia.org/wiki/Keating_Five
- http://keating.ccv.brown.edu/actors/affiliates/Lincoln-Savings-and-Loan
- https://www.euromoney.com/article/b1320xmnjjm1c0/the-case-against-alan-greenspan
FAQs
What was Alan Greenspan’s involvement in the Keating Five scandal?
Alan Greenspan, a private economist at the time, provided a study that supported Charles Keating’s argument that direct investments were not harmful. He also supported Keating’s position in the face of regulatory actions against Lincoln Savings and Loan Association.
Why did Greenspan’s actions raise concerns?
Greenspan’s involvement was seen as an attempt to influence the FHLBB’s investigation into Lincoln Savings and Loan Association, especially considering Keating’s significant contributions to various U.S. Senators.
How did Keating try to influence the regulatory process?
Keating managed to get President Ronald Reagan to make a recess appointment of a Keating ally, Lee H. Henkel Jr., to the FHLBB. This appointment was seen as an attempt to further influence the regulatory process in Keating’s favor.
What impact did Greenspan’s involvement have on the investigation?
Greenspan’s involvement and Keating’s connections to influential individuals raised concerns about the integrity of the investigation into Lincoln Savings and Loan Association. The investigation was lengthy, and Keating wanted the senators to intervene with the FHLBB on his behalf.
Why is Greenspan’s involvement significant?
Greenspan’s involvement highlights the potential for conflicts of interest and the influence of special interests in shaping regulatory decisions. It also raises questions about the role of private individuals in influencing government investigations and the importance of maintaining the integrity of regulatory processes.
What happened to Lincoln Savings and Loan Association?
Lincoln Savings and Loan Association eventually failed, and the federal government was forced to bail it out at a cost of over $3 billion. Keating was convicted of fraud and racketeering in connection with the collapse of Lincoln Savings and Loan Association.
What were the consequences of the Keating Five scandal?
The Keating Five scandal led to a number of reforms in the financial industry, including increased regulation of savings and loan associations and stricter rules on conflicts of interest for government officials.
What is Alan Greenspan’s legacy?
Alan Greenspan is a controversial figure, with some praising his role as Federal Reserve Chairman and others criticizing his handling of the financial crisis of 2008. His legacy is still being debated today.