Everybody who was anybody in Phoenix has a favorite story about Charles H Keating Jr., who died this week at 90. Here's mine. By the time I came back in 2000, Keating, the disgraced imprisoned former S&L kingpin, was once again a fixture around town. I would run into him at Durant's, where he was cordial but declined my invitation to sit down sometime and tell his story.
One day the restaurant was packed and Keating couldn't get seated. He confronted the day manager, the fabulous Mari Connor, and said, "Do you know who I am?" Without a second's hesitation at a restaurant that had hosted governors and mobsters, Connor said, "No, but I'm sure they can seat you up the street at Alexi's. Otherwise, the wait is thirty minutes."
Time wounds all heels.
I was gone from Phoenix during Keating's glory days of the 1980s. He developed Dobson Ranch in Mesa and Estrella Mountain Ranch in Goodyear among many other projects. The most impressive physical monument he left behind was the Phoenician resort. The name says much about the time: Phoenix was still the center of "the Valley's" economic universe. It would never happen today; the resort claims it is in Scottsdale, even though it in the city. And for all the criticism heaped upon it, the Phoenician to me remains a beautiful place — built within the existing urban footprint — with an apt, evocative, allusionary name.
Friends would send me articles about Keating and I was troubled. I remember one magazine piece: Charlie was standing in the desert in a haughty pose, even though his face looked as if he was five minutes from heat stroke.
He exemplified a Phoenix changing for the worse. Not only the sprawl development, but a carpetbagger with none of the deep personal attachment to the city that marked the old stewards. The ones who built companies there and saw the city's health as integral to that of their businesses.
They had conveniently died off, leaving no real heirs with the same power and a vacuum that the likes of Keating filled. Charlie seemed very much into Charlie-promotion, including with Mother Teresa, but was no Phoenix leader or steward. The major company he headquartered there proved a house of cards that left not so much as a good building behind (unlike, say, Western Savings).
Charlie and I had a bit of a mirror-vision history. When he went to Phoenix, I went to Dayton and then his hometown of Cincinnati. At the Dayton Daily News, I worked with John Dougherty in exposing the Keating Five, the senators the kingpin had given some $1.3 million.
Dougherty was the first reporter to get the top savings and loan regulator to say he had been leaned on to go easy on Keating's Lincoln Savings and Loan in Irvine, Calif. Lincoln was the biggest timebomb of dodgy practices and rackets that would destroy an entire industry and cost taxpayers dearly. It foreshadowed the subprime hustle.
The five were Arizona's Dennis DeConcini and John McCain, along with Alan Cranston of California, Don Riegle of Michigan and John Glenn of Ohio.
I still remember the day Glenn came to the stately Govenor's Library at the Daily News to explain himself and nearly launched across the same conference table where Woodrow Wilson and FDR had sat to get into a Marine brawl with Dougherty over his "impertinent" but very pertinent questions.
In Dayton, we took special pleasure in riding the Keating Five story because the publisher of the Cincinnati Enquirer was Charlie's brother, William. The Enquirer barely covered the story. But this was nothing new: Back in the day, Charlie had been the capo of the newspaper's then-owner, financier Carl Lindner, and frequently meddled in news coverage, keeping the watchdog chained. In Dayton, home of one of America's great investigative journalism traditions, we were under no such constraints.
And in fact wealthy Republican John Sidney McCain III was far from the naive, "golly gosh" least-culpable member of the bunch, as was often portrayed. McCain and Keating were very close, socially and financially.
Later, when the Enquirer wanted to up its game, it brought me in as business editor. We ran a five-day series on Lindner, the most powerful and feared man in town. Even here, that Cincinnati-Phoenix connection emerged.
A financier with wide holdings, Lindner submarined Phoenix's Karl Eller in the sad fate of Combined Communications, which, had it survived, might be a major Phoenix corporate headquarters. Eller, whose biography is titled Integrity is All You've Got, had never encountered a shark like Lindner. Characteristically, Eller is generous to Lindner and takes the blame himself.
Our unflinching but fair journalism earned Lindner's respect. For all his power, he was from industrial Norwood, not the tony east side; like schoolmate Marge Schott, he was never accepted by the Queen City Club, for all his riches. He was deeply secretive. When we would go to meet his top lieutenant, we joked that Lindner was watching through the eyes of a portrait in the office. But in reality, a door was always cracked and I suspect Lindner was on the other side, listening.
Although we never won a sit-down with Lindner, he would communicate with me through couriered messages scrawled on his business cards. Lindner was a street kid and a street fighter. He was not only a master of empire building and the pre-packaged bankruptcy filing, he knew how to walk right up to the line of legality without ever stepping across.
This pertains to Charlie Keating because, it was said, he had essentially been told to get out of town by Lindner, who didn't like his apparent willingness to at least look across that line. Keating went to Phoenix, leaving behind a legacy in Cincinnati for his anti-porn crusades. And everybody in Cincinnati, a city where people are born and stay, seemed to have a Charlie Keating story, too.
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When federal regulators seized Lincoln Savings in 1989, up to then the costliest financial institution failure in American history, they had no doubt that Keating had stepped over the line.
In addition to allegations of skimming deposits for personal uses and to buy politicians, Keating ran an S&L that notoriously sold junk bonds to unwitting customers. Many of them elderly, they cashed out federally insured deposits to buy $265 million of uninsured debt in American Continental, Keating's complex umbrella corporation that included house-building, insurance, banking and, perhaps, offshore ventures. The customers were ruined.
I am told that when Charles Bowden co-wrote his book, Trust Me: Charles Keating and the Missing Billions, he dedicated it to an 89-year-old man who, having lost his entire life's savings in one of Keating's schemes, filled up his bathtub, sat down, and opened his veins with a razor blade.
Keating was convicted of looting the thrift and swindling customers, but those were overturned. He served four-and-a-half years in prison for bankruptcy fraud. His only complaint about the pen, I am told, was the lack of a swimming pool, forcing him to walk to stay in shape. He (joked?) about suing the feds for a knee-replacement operation.
To the end, Charlie maintained his innocence, indeed his victimhood. He blamed the government for the Lincoln collapse and everything that happened in the S&L bust (which was also catastrophic for central Phoenix).
History may remember him as a bridge between old-time swindlers and the players who brought on the financial panic and Great Recession. Specifically, influence peddling to declaw regulators, hyper-complexity of business dealings, the purchasing of powerful lawmakers and sociopath entrepreneurship. All this in an outwardly likable man who everyone praised for his love of faith and family.
As for Phoenix, during the Keating years sprawl slipped the leash. Estrella Mountain Ranch, although reduced from its original ambition by Charlie's fall, represented the worst of leapfrog development. He was a pioneer of the huge, civically destructive "master planned community" that has become ubiquitous. He was missing from the leaders promoting Valtrans, a Phoenix-centered bus-and-rail system that could have avoided the worst land-use excesses. Valtrans lost at the ballot box, with lasting consequences.
Newcomers now see the damage and say, "Oh, that's the Wild West." No, it was the wild Midwest, transplanted to Phoenix.
Keating marked an important dividing line: between the powerful leaders who had, for all their flaws, failures and blind spots, built a civilization in the desert through sacrifice, vision and mighty acts — and the looters who were there to take, use it up and throw it away.