Reid Dials for Dollars for Casino Project

On Sunday the Las Vegas Review-Journal reporter Howard Stutz wrote that MGM Mirage majority shareholder, founder and board member Kirk Kerkorian “and Senate Majority Leader Harry Reid, a close friend, have been calling financial institutions to try and raise the remaining $1.2 billion needed to complete the $9.1 billion City Center development.”

Republican political consultant Robert Uithoven was the first to pick up on the explosive nature of that report. “Can you imagine,” Uithoven wrote in an email shortly after the story was posted online, “being a financial institution getting a call from the Senate Majority Leader – during a time he is one of the top officials in Washington determining who in the financial industry gets bailed out with further taxpayer money and who doesn’t – and being asked for money to fund the debt of a private corporation?”

No kidding.

This is like Tom Hagen pledging The Godfather’s “undying friendship” if Jack Woltz would just “grant us a small favor” and give Johnny Fontaine that part in his new war film. I can just hear Mr. Kerkorian’s closing pitch at the end of these calls: “Sen. Reid never asks a second favor after he’s been refused the first. Understood?”

Blogger Steve Friess also immediately picked up on what he described as “something that seems like it could be an enormous scandal and right-wing outrage if true.”

“Um, wow,” Friess wrote on his blog. “The nation’s most powerful legislator is ringing up investment houses big enough to pony up $1.2 billion and pleading with them to save a massive Strip casino development? Really? Does that sound sane to you? . . . Such phone calls would seem to be laden in all sorts of ethical and political minefields.”

No kidding.

So Friess contacted MGM Mirage spokesman Alan Feldman to see if the story was true. Feldman responded that it wasn’t exactly as the Review-Journal reporter reported it.

“We, and hundreds of other businesses around the country, have tried to use any possible (sic) avenue to get banks lending again, including asking politicians to weigh in,” Feldman advised Friess in a text message. “They’re not being asked to involve themselves in any of the detail, just to emphasize the larger public interests at play in making loans and getting the flow of credit started.”

Feldman denied that Reid had called any bank asking it to give MGM Mirage, or any other gaming company, a loan.

But as it turns out, it appears Mr. Feldman was shading the truth just a tad. In a statement from Reid’s spokesman, Jon Summers, to Friess on Monday morning, we found out that “Senator Reid has simply been asking banks to take a fair look at MGM’s CityCenter project to ensure that sound banking analysis is driving credit decisions, not irrational temerity over what is sometimes portrayed as a controversial industry.”

So Sen. Reid hasn’t been – wink, wink – asking banks to give a loan to MGM Mirage, only to – hint, hint – “take a fair look” at MGM Mirage’s loan request.

“You’re gonna have some union problems. My client could make them disappear. Also, one of your top stars has just moved from marijuana to heroin.”

Friess followed up with Sommers and the following exchange took place:

Friess: Your statement does not deny that Reid has called banks on MGM Mirage’s behalf.

Summers: Right, but he has not been raising money.

Friess: I’m trying to decipher the difference. Reid has called banks and said, say, “Hey, please take an honest look at whether this is a good company and project to loan money to? Don’t just say no out of hand?” Something like that?

Summers: Exactly. He wanted to make sure that a potential loan would be given serious consideration. The loss of this many more jobs would be devastating.

Friess: Do you think making such a call would make the banks feel pressured because it’s coming from Sen. Reid?

Summers: Again, he didn’t call and say, “Loan them this money.” He wanted to make sure that the company got a fair review. Those are two different things. Do we all hope that a fair review would result in an outcome that would preserve the jobs? Yes. But there is still a difference.

No there isn’t. That’s pure butt-covering political spin. As Friess concluded in his blog: ”The thing I wonder is, if I’m a bank and Sen. Reid is on the line saying, ‘Take a REALLY good look at this one,’ do I feel implicit pressure? Is there any way for Sen. Reid to be involved in such an effort and not have the weight of his position come to bear?”

The answer, of course, is yes…you absolutely feel implicit pressure. And yes, the weight of Reid position as the second most powerful man in the United States government absolutely comes to bear.

Friess isn’t the only one suspecting that Reid’s reported behavior here appears inappropriate. Jon Ralston is weighing in, as well.

“That struck me as quite strange,” Ralston wrote in Flash Monday morning. “Reid calling banks to try to raise money for a major business/political player. Is that appropriate? Is he making other calls? Is he helping the little old lady in the mobile park with her banker, too?”

Ralston also wrote, tongue planted firmly in cheek, how he thought such a phone call might go:

Reid to Major Banker: “Hello, Major Banker. Please give MGM MIRAGE a fair shake. Just because they are into gambling, don’t hold out your $1.2 billion. You used to love gambling companies.”

Major Banker to Reid: “Thanks for your interest, Mr. Majority Leader. I am sure I will be able to simply ignore this light-handed request from a powerful pol. I won’t worry about the company’s debt or stock price anymore. By the way, are you up for re-election next year?”

Later, Ralston and MGM spokesman Feldman exchanged a few emails on this matter, with Feldman spinning the calls as “protecting jobs.” Ralston asked Feldman is Sen. Reid was making these sorts of calls for anyone else. “Just MGM,” Feldman replied. “There’s a reason for that. If the (CityCenter) project doesn’t get funding and construction stops, there are 10,000 people who would lose their jobs.”

“But is it appropriate for the most powerful legislator in DC to apply pressure, subtle or otherwise, on private institutions to influence their lending decisions?” Ralston asks. “It’s one thing to call a news conference to say, ‘My home industry is hurting and I hope banks will be fair.’ It’s quite another to call and ask them to be fair. Isn’t it? I sense this is just the beginning of a story that got an innocuous start in a business column.”

And oh, how right he was. Another shoe dropped Monday afternoon when it was revealed that Nevada’s junior senator, John Ensign, also made such inappropriate calls to banks on behalf of MGM Mirage. That revelation came with this statement from MGM’s Feldman:

“Wouldn’t you also be outraged if a Senator DIDN’T stand up for the largest employer/taxpayer in his/her state and try to inquire about what issues stand in the way of financing the largest investment in US history and the largest job-creator in the nation? What Senator wouldn’t do that? Our two certainly did. . . . (A) politician calling on a bank to get funds moving again seems the right and appropriate action, not something deserving of scorn.”

No, it deserves scorn. And probably a federal investigation.

That neither Feldman, Reid nor Ensign see what’s wrong in having very powerful politicians calling banks on behalf of a private company and pressuring the banks, either implicitly or explicitly, to take a “fair” look at the company’s loan request says a lot about the ethical values these folks possess these days.

This whole thing stinks like yesterday’s diapers. And I suspect this is just the tip of the iceberg. I’d like to know EXACTLY who Reid and Ensign called and EXACTLY what was said on those calls. And I’d also like to know if either Reid or Ensign or their immediate family members own MGM Mirage stock?

By the way, are there any other Nevada businessmen out there who would like Reid and Ensign to call your bank about a loan for your business? Or are you all good to go?