Political Hay

The IRS Ten: The New Keating Five

Nine senators, congressman follow pattern of S&L scandal: contributions and intervention.

By 6.13.13

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So here’s the formula.

An independent agency of the U.S. government.

United States Senators.

A powerful campaign contributor to said United States Senators.

A powerful campaign contributor who wants something from said independent agency.

Add it all together and what you get is -- The Keating Five.

And the IRS Ten.

Let’s start, by way of illustrating how the game worked, with The Keating Five.

There were five of them. Five United States Senators.

Two already military heroes before they spent a day in the United States Senate. The other three were garden variety U.S. Senators, lifelong politicians.

Together, they became known as “The Keating Five.”

In the 1980s and 1990s there was a major collapse of the U.S. Savings and Loan industry. Almost 750 S&Ls failed, going belly-up. The financial audit of the Resolution Trust Corporation’s financial statements for 1994 and 1995 showed that American taxpayers wound up paying almost $125 billion to resolve the crisis, with the total cost nearing $160 billion.

Attention eventually focused on the activities of one S&L -- the Lincoln Savings and Loan Association from Irvine, California. The Lincoln S&L had been purchased by a corporation owned by the Lincoln chairman, a wealthy man named Charles Keating. While S&Ls had been deregulated to some degree in the 1980s, they were still very much a regulated industry. The government agency charged with regulating S&Ls -- including the Lincoln Savings and Loan that was run by Charles Keating -- was the Federal Home Loan Bank Board. Keating felt the FHLB investigation was being too tough on Lincoln. So tough that Lincoln, it appeared, was about to be seized by the government because the S&L was believed to be insolvent. Keating wanted action taken to stop the independent FHLB in its tracks.

How to do this?

There were five United States Senators in a position to help Keating -- if they could be persuaded to do so.

Those Senators -- four Democrats and one Republican -- were, in alphabetical order: Alan Cranston (D-CA), Dennis DeConcini (D-AZ), John Glenn (D- OH), John McCain (R-AZ), and Donald W. Riegle, Jr. (D-MI).

How did Keating get the attention of these five powerful and influential senators? Follow the money.

Campaign contributions. Taken together, some $1.3 million in campaign contributions from Charles Keating flowed into the coffers of the five senators -- or, it is important to note, other funds controlled by the senators or their political allies. As an example, the New York Times reported the money game worked this way with California’s Senator Cranston, bold print for emphasis mine: 

For his 1986 re-election campaign, Mr. Cranston received $39,000 from Mr. Keating and his associates. Mr. Keating donated $850,000 to groups Mr. Cranston controlled or founded and $85,000 for the California Democratic Party.

Catch that? There were, in other words, two streams of campaign contribution money going to Cranston. Stream Number One was the $39,000 collectively from Keating and his wealthy associates that obeyed FEC rules and went to Cranston’s re-election committee in all the appropriate dribbles. But Stream Number Two -- a stunning $850,000 -- went to “groups Mr. Cranston controlled or founded” while another contribution of $85,000 went to fuel Cranston’s California Democratic Party.

The same pattern was followed as well, according to the Times, with Senator Glenn. Glenn’s re-election campaign received a Stream Number One contribution of $34,000 from Keating and his associates, dispersed in the usual FEC limits. But in Stream Number Two, says the Times,“…a political action committee associated with Mr. Glenn received another $200,000.”

Take note of how this game worked with Cranston and Glenn. We’ll come back to it with the IRS.

And in return?

The five senators decided to intervene for Keating with the independent regulatory body that was the Federal Home Loan Bank Board. They would do this by putting pressure on this particular independent government agency. Contacting the agency with demands to manipulate its investigative process, subverting the integrity of the agency -- to benefit Charles Keating.

In the end, all five senators were brought up on ethics charges before the U.S. Senate’s Ethics Committee. The Ethics Committee spent 22 months investigating the senators who had become infamous as “The Keating Five.” One, California’s Cranston, was reprimanded. Two, Michigan’s Riegle and Arizona’s DeConcini, were found to have acted improperly. Cranston, Riegle, and DeConcini declined to run for re-election. Glenn of Ohio and McCain of Arizona were found to have exercised “poor judgment,” with Glenn retiring after one more election. McCain is still in the Senate and was the GOP presidential nominee in 2008.

Now.

What is it that we have here in the IRS scandal with nine U.S. Senators and one Congressman?

What is it that bears such a striking similarity between what we will call the IRS Ten and the Keating Five?

Let’s begin with White House press secretary Jay Carney’s own definition of the Internal Revenue Service. On May 10, with the IRS scandal breaking, Carney was asked about the IRS at the start of his White House briefing. The Obama press aide described the IRS as an “independent enforcement agency.”

More specifically, according to Mediaite, Carney said this (bold print for emphasis): 

“The IRS, as you know, is an independent enforcement agency with only two political appointees,” he continued. “The fact of the matter is what we know about this is of concern. And we certainly find the actions taken, as reported, to be inappropriate. And we would fully expect the investigation to be thorough and for corrections to be made.”

When pressed on whether it’s understandable that many see the IRS’s targeted moves as “politically motivated,” given the administration’s negative sentiment towards the Tea Party movement, Carney responded by reiterating that “the IRS is an independent enforcement agency, which I believe contains only two political appointees within it.”

Got it. In the eyes of the Obama White House, the IRS is an “independent enforcement agency” with only two political appointees. Just two.

Or is it two?

If the IRS has only two political appointees, what does one call all those thousands of IRS employees that are members of the distinctly very political, very left-wing National Treasury Employees Union? The NTEU represents 31 government agencies, including but most definitely the IRS. In fact, as we have mentioned, the NTEU president Colleen Kelley is herself a 14-year IRS agent. So when we refer to the NTEU as the “IRS union” -- it is indeed just that. Who needs political appointees when the entire IRS is filled with members of the far-left NTEU union -- the official union of the IRS?

The union, as we have discussed here, here, here, here, here, and here, is one of the most highly politicized unions in the country.

As it were, the IRS union is effectively a 21st century version of Savings and Loan operator Charles Keating. With one very serious and considerable difference.

Like Charles Keating, the IRS union is a powerful campaign contributor to United States Senators.

Like Charles Keating, it is a powerful campaign contributor that wants something from an independent agency of the U.S. government.

But the big difference?

Charles Keating was not both the Chairman of the Lincoln Savings and Loan -- and a member of the Federal Home Loan Bank Board he was try so brazenly to pressure with the help of The Keating Five.

The IRS union is both the contributor to the United States Senators from whom it is seeking a favor -- and the government employees that those very Senators, elected with IRS union contributions, are going to for the purpose of putting the squeeze on the Tea Party, conservatives, pro-lifers, and more. All of whom are political opponents of both the Senators -- and the IRS union itself.

Let’s see how the game played by The Keating Five has been played by The IRS Ten.

Let’s pick one player to begin. Senator Charles Schumer of New York.

Let’s look at Schumer’s Stream One contributions from the IRS union. There was $3,000 in 2004 for Schumer’s re-election bid. And in 2010, when Schumer was again a candidate for re-election? The IRS union kicked in $2,500 to Schumer’s campaign.

But what about Stream Two? In 2006 and 2008 Charles Schumer was the chairman of the Democratic Senatorial Campaign Committee. In 2006 Democrats retook control of the Senate. And the IRS union’s Stream Two contributions to the DSCC that was headed by Schumer in 2006? That would be a cool $25,000. In 2008, when Schumer was still the DSCC head? That year the IRS chunked in even more -- $35,000 to Schumer’s committee. For a grand total of $60,000 in Stream Two money to the Schumer-run DSCC.

Likewise, the same Keating Five pattern follows with Colorado’s Senator Michael Bennet.

Bennet, appointed to a Senate vacancy, ran for election to a full term in 2010. The IRS union gave him $8,500. Of Stream One money. But in 2012? Of a sudden the IRS union felt the urge to donate $5,000 in Stream Two money -- to the Colorado Democratic Party.

Then on March 12, 2012 -- as was first revealed by Elizabeth MacDonald over at Fox Business -- Schumer and six other Senate Democrats sent this letter to the IRS. The letter pressures the so-called “independent” agency that is the IRS-- whose employees had given all of the signers Stream One campaign contributions and made suspicious Stream Two contributions to arms of the Democratic Party specifically associated with Schumer (that $60,000 for the Schumer-run DSCC) and Bennet (the $5,000 to Bennet’s Colorado Democratic Party). The second name signed on that letter to the IRS from Schumer? That would be Colorado’s Michael Bennet. The five others were Senate Democrats Sheldon Whitehouse (RI), who received $2,000 from the IRS union in 2012, Merkley (OR) who received $5,000 from the IRS union in 2008, Udall (NM) who received $10,000 from the IRS union in 2008 and another $1,000 in 2010, and Franken (MN) who got $5,000 in IRS union money in 2008. Shaheen, who we previously thought not to have received IRS union funds, in fact received $7,500 in union funds.

All of this in Stream One money.

The letter from the powerful senators to the IRS demanded, in Keating Five fashion, that the IRS “take steps immediately to prevent abuse of the tax code by political groups focused on federal election activities,” adding, “If the IRS is unable to issue administrative guidance in this area then we plan to introduce legislation to accomplish these important changes.”

In addition to these seven, there was, as noted here, the July 2012 letter from Senator Carl Levin (D-MI),

who chairs the Senate Permanent Subcommittee on Investigations, writes a 6-page letter on official Subcommittee stationery to IRS Commissioner Douglas Shulman. Saying the response from an earlier letter to IRS official Lois Lerner was unsatisfactory, Levin, among other things, names 12 conservative groups by name and demanding to know if “they have a) applied for; and if so, b) received the described exemption for political activity from the IRS?”

Levin received a Stream One $3,000 contribution from the IRS union in 2008.

There was, as also noted earlier in MacDonald’s story, Senator Max Baucus (D-MT), who wrote a September 28, 2010 letter to the IRS on his stationery as chair of the Senate Finance Committee demanding: “I request that you and your agency survey major 501(c)(4)” groups for “possible violation of tax laws.”

Baucus received a Stream One IRS union contribution of $2,500 in 2008.

Not to be forgotten here is Vermont Congressman and Democrat Peter Welch. As I noted previously, on March 2, 2012:

Congressman Peter Welch, a Vermont Democrat, writes IRS Commissioner Douglas Shulman requesting that “the Internal Revenue Service (IRS) to investigate whether any groups qualifying as social welfare organizations under section 501(c)(4) of the federal tax code are improperly engaged in political campaign activity.” In 2010, Congressman Welch, who sits on the House Oversight and Government Reform Committee that oversees the IRS, received a $1,000 contribution from the IRS union. He won with 64.6% of the vote. In 2012, Welch received another $1,000 contribution and won with 72%. 

The Welch contributions were Stream One IRS union contributions.

Let’s ask our increasingly favorite question.

What do we have here?

What we have is the pattern of The Keating Five.

Just as The Keating Five Senators took money in the form of Stream One and Stream Two contributions from Charles Keating, now we have nine U.S. Senators and one US Congressman who have all taken either Stream One money and in the cases of Schumer and Bennet Stream Two money as well from the IRS union -- the NTEU.

The Keating Five, according to the Times, then intervened on Keating’s behalf with an independent federal agency, the Federal Home Loan Bank Board.

The IRS Ten have intervened with the IRS for the specific purpose of shutting down not only their own political adversaries in the Tea Party and other conservative groups, but political adversaries they share in common with the IRS union itself. The NTEU.

The difference between The Keating Five and The IRS Ten?

Charles Keating wasn’t both the player -- and the referee. Keating was the Chairman of the Lincoln Savings and Loan. But he was not a member of the Federal Home Loan Bank Board.

The IRS union is both player -- and referee.

As a player, the IRS union has given Stream One and Stream Two money in the hundreds of thousands of dollars to The IRS Ten .

As a referee, when The IRS Ten write letters using their official positions -- positions obtained with those IRS union contributions -- those letters demanding that the IRS do something to stop the Tea Party and conservatives go to: the very same IRS employee union that has just given the money to stop these same groups over which they now sit in official judgment.

The Keating Five lives.

This time you can call them The IRS Ten.

And whatever else you call this game -- the word that comes to mind is “corrupt.”

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About the Author
Jeffrey Lord is a former Reagan White House political director and author. He writes from Pennsylvania at jlpa1@aol.com.