[97] When news of affair broke to the media, Bush stated that he had been "out of the loop" and unaware of the diversion of funds.[126] Biographer Jon Meacham writes that "no evidence was ever produced proving Bush was aware of the diversion to the contras," but he criticizes Bush's "out of the loop" characterization, writing that the "record is clear that Bush was aware that the United States, in contravention of its own stated policy, was trading arms for hostages".[127] The Iran–Contra scandal, as it became known, did serious damage to the Reagan presidency, raising questions about Reagan's competency.[128] Congress established the Tower Commission to investigate the scandal, and, at Reagan's request, a panel of federal judges appointed Lawrence Walsh as a special prosecutor charged with investigating the Iran–Contra scandal.[129] The investigations continued after Reagan left office and, though Bush was never charged with a crime, the Iran–Contra scandal would remain a political liability for him.[130]
On July 3, 1988, the guided missile cruiser USS Vincennes accidentally shot down Iran Air Flight 655, killing 290 passengers.