During the year 1980s in Irvine, California, there was the Lincoln Savings and Loan Association, a financial institution that was the heart of the Keating Five scandal. The institution resulted to scandals of Savings and Loan that associated five United States senators. During this period, saving and loan industry met little competition compared to the traditional banks as well as financial institutions. However, the inflation of the country by then had reached high levels. Therefore, many of the savings and loans associations lost their money to the fixed-rate loans that was set up during previous years. Also, the interest rates were under the rate of inflation.
In other words, this means that, the companies paid their customers in order they borrow money. Lincoln Savings and Loan was established and managed by Keating besides American Continental Corporation (ACC). ACC was established by a wealthy businessmen with an objection of working with real estate projects located in Colorado and Arizona. Keating in his glory days was a goal oriented, very intelligent, complex, and self-driven decision-maker, who could always work in 18 hours a day (Binstein, Michael, and Charles Bowden, 76).
Though, Keating was the leader of his organization, he later developed to be a man of personal money manager ending up using his company’s properties to help him in better interest. Lincoln Savings & Loan Association has shown a slow growth in its trend followed by loss since nearly half of its properties in home loans were considered at risk. However, the association came to pick up and made a significant profit of a few dollars in the year 1983. In the year 1989, ACC was declared to be bankrupt, and it was the parent of Lincoln Savings, this resulted to loss of life savings of many elderly investors (Binstein, Michael, and Charles Bowden, 42).
The Keating Five emerged after the fall of Lincoln Savings and Loan Association. In the year 1989, the FHLBB was following a case against Charles Keating. It was later discovered that, the five senators who are John McCain, Dennis DeConcini, Donald Riegle, John Glenn, and Alan Cranston were the beneficiaries of $1.3 million contribution of campaign of Keating. The political culture surrounding the Savings & Loan had important impact on Lincoln's decline. In order for Keating to keep and change policies of his company, he had to ensure these senators are happy, though, he had been successful in doing so (Binstein, Michael, and Charles Bowden, 63).
Ethics in business, Keating had a social responsibility this is because he showed good judgment in ethical behavior to his investors when managing Lincoln’s day-to-day operations. While taking into thought Charles Keating's background as a professional person and trusty banker, it looks like Keating might have created a habit for himself. Generally, Charles Keating's moral behavior and transactions with the savings and loan trade can be considered in many alternative ways. The consequentialism theory behind things is aware of Keating's behavior which might be influenced by consequences of political action. As explicit earlier, Keating needed things to be as he likes within the Savings & Loan policies created by Congress. In the future, the savings and loan trade can influence be stricter owing to Keating and also the Keating Five's scandal. The immeasurable greenbacks and a number of other thousands affected owing to things may be a historical bequest that carries on these days.
Works Cited
Binstein, Michael, and Charles Bowden. Trust Me: Charles Keating and the Missing Billions. New York: Random House, 1993. Print.
