American Continental Corporation

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American Continental Corporation was a Phoenix, Arizona-based[1] real estate company of the 1970s and 1980s.

It was created in 1978[2] as a spin-off of American Financial Group,[citation needed] meant to do residential home construction.[2] Its chairman was Charles Keating,[3] who moved to Phoenix to run it.[2]

By 1981, Keating had two thousand employees on his payroll and was one of the largest land developers in Arizona, benefiting from a home building boom in the state.[2]

In February 1984, American Continental Corporation acquired the underperforming Lincoln Savings and Loan Association for $51 million.[3][2] Much of American Continental's assets were in the form of Arizona real estate, junk bonds, and mortgage-backed securities.[4] Lincoln Savings expanded into aggressive, risky land development deals and financial arrangements, including loans due to American Continental.[2] For most of 1987, American Continental was profitable, but by 1988, losses mounted, due to financial troubles and other bad happenings at Lincoln Savings.[4] By 1989, Lincoln made up 90 percent of American Continental's assets.[4]

On April 13, 1989, American Continental Corporation filed for Chapter 11 bankruptcy.[4] The loss of investors' life savings in Lincoln became one of the key events of the 1980s Savings and loan crisis and the core of the Keating Five political scandal.

[edit] References

  1. ^ Alexander, Paul (2002). Man of the People: The Life of John McCain. John Wiley & Sons. ISBN 0-471-22829-X.  p. 108.
  2. ^ a b c d e f McCain, John; Salter, Mark (2002). Worth the Fighting For. New York: Random House. ISBN 0-375-50542-3.  pp. 161–163.
  3. ^ a b "The Lincoln Savings and Loan Investigation: Who Is Involved", The New York Times, 1989-11-22. Retrieved on 2007-05-25. 
  4. ^ a b c d "American Continental Files For Chapter 11 Bankruptcy", The New York Times, 1989-04-13. Retrieved on 2008-04-19.