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Dec. 4, 1923 - March 31, 2014

WASHINGTON – Charles H. Keating Jr., who went to prison and came to symbolize the $150 billion savings-and-loan crisis a generation ago after fleecing thousands of depositors with regulatory help from a group of U.S. senators known as the Keating Five, has died. He was 90.

The death was confirmed by his son-in-law, Gary Hall.

The S&L debacle of the 1980s and ‘990s, when a thousand institutions collapsed in an implosion of reckless investments, may be a distant echo in a nation stricken by economic turmoil. But to millions old enough to have been dragged through the mess, Keating is remembered, perhaps unjustly, as the pre-eminent villain of an era when depositors lost life savings they had squirreled away in hometown thrifts they thought were safe.

Keating, who pleaded guilty to fraud charges, had been a young man of promise – a Navy flier during World War II, an All-American swimmer in college, the leader of a national campaign against pornography, a blustery Cincinnati lawyer and businessman whose brother was an Ohio congressman.

But in 1984, Keating, then a 61-year-old Phoenix real estate millionaire, bought Lincoln Savings & Loan, of Irvine, Calif., for $51 million, double its net worth. Lincoln, with 26 branches, made small profits on home loans, but under new state and federal rules it could make riskier investments, and Keating began pouring depositors’ savings into real estate ventures, stocks, junk bonds and other high-yield flings.

In three years, Lincoln’s assets soared from $1 billion to $3.9 billion, and Keating was using the business as his personal cash machine, taking $34 million for himself and his family and $1.3 million more for political contributions, prosecutors said.

The Federal Home Loan Bank Board, fearing wide collapses in a shaky industry, finally imposed a 10 percent limit on risky S&L investments. By 1987, its investigators found that Lincoln had $135 million in unreported losses and was more than $600 million over the risky-investment ceiling.

Keating called on Sens. Alan Cranston of California, Donald W. Riegle Jr. of Michigan, John Glenn of Ohio and Dennis DeConcini and John McCain of Arizona, all recipients of his campaign largess, to pressure the bank board to relax its rules and kill its investigation.

All five met with regulators, and Edwin J. Gray, then the board chairman, said four senators – all but Riegle – “came to me like lawyers arguing for a client.” He resisted, but was replaced by a chairman more sympathetic to Keating, and the board backed off, with disastrous results for depositors and investors.

For two more years, Lincoln survived. Meanwhile, Lincoln talked many customers into replacing federally insured deposits with high-yielding bonds from Lincoln’s parent, American Continental, a Keating corporation that was drowning in losses. A witness in a lawsuit years later produced a Lincoln memo, telling its bond salesmen to “remember the weak, meek and ignorant are always good targets.”

In 1989, American Continental went bankrupt and an insolvent Lincoln was seized by the government. Some 23,000 customers were left holding $250 million in worthless bonds, the life savings of many, and taxpayers paid $3.4 billion to cover Lincoln’s losses. It was the largest of 1,043 S&L failures between 1986 and 1995. The government sued Keating for $1.1 billion, but he said he was broke.

Convicted of fraud, racketeering and conspiracy in state and federal trials, Keating went to prison for more than 4 years. Both verdicts were overturned on appeals in 1996. California dropped its case, and on the eve of a federal retrial in 1999, Keating, who always insisted he had done nothing wrong, pleaded guilty to four counts of wire and bankruptcy fraud and was sentenced to time already served.

The Keating Five – all Democrats except McCain – also insisted they had done nothing improper. The Senate Ethics Committee concluded in 1991 that none had violated laws, but said Cranston, DeConcini and Riegle had interfered with the bank board’s inquiry. Glenn and McCain were cleared, but criticized for “poor judgment.”

Keating never minced words about buying political influence. Asked once whether his payments to politicians had worked, he told reporters, “I want to say in the most forceful way I can: I certainly hope so.”