Charles Keating: A man of contradictions

July 19, 1993|By Hiawatha Bray | Hiawatha Bray,Knight-Ridder News Service

Reading this book may make you wish that the late Orson Welles had taken better care of himself.

He might still be with us, ready to film his next masterpiece: the bizarre story of Charles Keating -- devout Catholic, loyal family man, daring real estate developer and bank robber. A "Citizen Kane" for the 1990s.

Michael Binstein, an associate of journalist Jack Anderson, and Arizona free-lancer Charles Bowden have written the best business book since "Barbarians at the Gate." "Trust Me" is journalism as Orson Welles might have practiced it -- not a cool, factual narrative, but a hilarious and rather scary tale of one of the strangest crooks of modern times.

The authors don't offer pat explanations of Keating's character. Instead, they use court records and interviews with Keating and his friends and foes to describe in detail the world Keating created and then destroyed.

Mr. Binstein and Mr. Bowden do ask us to take a great deal on faith. They admit that many of their anecdotes came from people who don't dare speak about Keating on the record, even though the man's doing 10 years in a California prison. Still, his criminal record is there for all to see, a catalog of astounding greed and corruption.

Like dozens of other financial wizards of the past decade, Keating realized that the deregulation of the savings and loan industry was essentially a license to steal. S&Ls once were the most conservative of institutions, kept that way by archaic federal regulations. The industry needed reform. Instead, it got anarchy.

S&Ls won the right to invest depositors' money in high-risk ventures, with the federal government guaranteeing to make up any losses to depositors. So S&L owners could invest in any smelly deal that hinted at a profit. If they were wrong, America's taxpayers were on the hook.

For Keating, a compulsive gambler who kept a craps table in his Phoenix home, the new rules meant he could break the bank. So he went out and bought a bank -- Lincoln Savings & Loan in Los Angeles. And then he broke it.

Through Lincoln, Keating lent himself hundreds of millions of dollars, in flagrant violation of such banking laws as still existed. About $80 million of the money was poured into Detroit's Pontchartrain Hotel. But that's nothing compared to the $300 million he poured into a huge luxury hotel in Phoenix.

There were many more deals. And then there were the millions in salaries, and the private air force -- three jets and a helicopter -- that whisked Keating to the world's most lavish resorts. And the vast contributions to friendly politicians.

All of these were paid for by people who'd simply wanted a safe place to deposit their savings. But at least the federal government will come up with the $2.5 billion these people lost. Thousands of others, many of them elderly, won't be so lucky. They put their life savings in uninsured junk bonds issued by Keating, and saw their money turn to wastepaper.

So where's the mystery? In the contradictions.

What can you make of a man who spends three days in a Yugoslavian peasant hut praying to the Virgin Mary, then hops his corporate jet for a trip to the casinos of Monte Carlo?

Keating donated millions to charity. When Mother Teresa came to America, his private air force was at her disposal.

But none of the money came out of Keating's pocket. Lincoln depositors and bondholders picked up the tab.

We learn that Keating routinely used racist epithets and claimed that the San Francisco bank examiners who investigated Lincoln were homosexuals with a vendetta against him. He loved to look down from his office window and fire the first employee he saw walking by. Yet he was horrified when he learned that many people despised him.

Keating became one of the nation's most prominent campaigners against pornography, and there seems no doubt that he genuinely hates the stuff. Yet he surrounded himself with attractive blond women, ogling them as they scurried through the office. Women who worked for Keating soon learned to cater to his tastes. So many of them got breast implants that one Phoenix plastic surgeon began offering a corporate discount.

There's a shocking or hilarious revelation about the world of Charles Keating on nearly every page of "Trust Me."

He comes across as a man driven by urges that even he barely understands. But rather than work through his passions with a priest or psychologist, Keating unleashed them on the American economy, with disastrous results.

Maybe with all that prison time on his hands, Charles Keating will write a book and explain himself, something Charles Foster Kane never did. Until then, "Trust Me" will likely stand as the final word on this enigmatic swindler.

BOOK REVIEW

Title: "Trust Me: Charles Keating and the Great American Bank Robbery"

Authors: Michael Binstein and Charles Bowden

Publisher: Random House

Length, price: 448 pages, $25

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