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August 24, 2016

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Reid, Ensign made calls to banks for MGM

CityCenter Construction

MGM Mirage's $9 billion CityCenter project, encompassing seven buildings, continues rising Thursday, Feb. 5, 2009. Launch slideshow »

WASHINGTON -- Nevada’s two senators personally called the CEOs and other top representatives of financial institutions asking them to consider loans to MGM’s troubled CityCenter project -- the nation’s largest private building project that employs 10,000 workers in Las Vegas.

Both Democratic Sen. Harry Reid, the majority leader, and Republican Sen. John Ensign, the fourth ranking leader in his party, reached out as the company seeks $1 billion from wary credit markets to keep the project on track.

Banks have been reluctant to lend during the credit crisis, and some believe the casinos can be seen as risky investments.

The senators’ intervention raises ethical questions. Would a call from the majority leader or a top Republican senator be seen as undue pressure on a company? Can the senators continue their oversight in imposing tough regulations on firms they are asking for help?

Congress has unleashed $1 trillion to shore up the financial sector since the economy nosedived last year, and is now considering pivotal legislation to regulate the markets. The Senate this week will take up a bill to ban bonuses for insurance giant AIG, and reforms are being discussed to further cap executive pay and regulate the credit industry with more stringent oversight.

Reid’s spokesman said the senator “was asked for help, and he helped.”

“When your state is in the shape Nevada’s in, with a 10 percent unemployment rate, you expect your elected officials do to what they can to protect their jobs and strengthen the economy,” said Reid spokesman Jon Summers.

“Senator Reid called the banks and asked them to give this project a fair shake.”

Ensign said he sought counsel from the Senate’s Ethics Committee before engaging in the calls.

“Trust me, I was very sensitive,” Ensign told the Sun. “I ran it through Ethics committee first, just making sure everything I was doing was within the rules.”

Neither Reid nor Ensign ever asked for a loan directly, and Ensign said he never discussed any legislative action pending in Congress.

“This is jobs -- that’s what you’re calling about,” Ensign said.

Ensign said he reached out to CEOs and those with political connections to the financial houses and “just basically told them how important it was for jobs in Las Vegas, to give it every consideration – given how tough the economy was.”

Ensign said he stressed during the calls that he “understood they had to make the right business decisions, but at the same time how important the project was for jobs in Las Vegas.”

Reid has been making calls on behalf of MGM for the past few months. Ensign said he started calling the executives the week before last.

Nevada’s casinos have faced their lowest revenues in 20 years, and some believe MGM is on the verge of filing for bankruptcy protection.

Both senators believe they can continue making tough decisions in Congress, even as they seek assistance for a prime constituent.

Steve Ellis, vice president at Taxpayers for Common Sense said “what we don’t want to see are lawmakers exerting influence in undue areas ... It certainly deserves scrutiny and raises red flags.”

But Princeton University Professor Julian Zelizer, who writes extensively about Congress, said “this, in a nutshell, is the challenge with congressional pork barrel politics and earmarks.”

“Reid is still a senator so it's unrealistic to expect he would not fight for projects that benefit his state,” Zelizer continued. “I don't know if it's appropriate or not, that depends on your politics and perceptions of the process, but it is exactly what we should expect from how Congress works.”

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