Las Vegas Sun

March 29, 2024

where i stand:

Sen. Reid stands up for Caesars and Nevada workers

Boy, are we going to miss Harry Reid!

Nevada’s senior United States senator has been the topic of a number of conversations since he announced he would be retiring at the end of 2016.

Most have revolved around the certain knowledge that all he has done to help the state will be sorely missed: the many ways he has used his considerable skills, the myriad methods he has employed to make sure Nevada was well-treated instead of maltreated in the Senate by the larger and more politically able states represented, and the knowledge of the ways of the Senate he has employed to advance the interests of the Silver State.

Politics aside, when you couple Harry’s deep concern for his home state with his uncanny ability to see around legislative corners, it is hard to find a more successful master of political legerdemain. Oh, yes, add to that his courage under fire and the combination is practically unbeatable.

A case in point is playing out in Congress this week.

The stakes are significant for companies all over the country, but for one Nevada company, the word existential may not be overstating the case.

Caesars Entertainment, like many Nevada companies that placed big bets on our economy in 2007, was not spared the pain and suffering of the great crash of 2008. The past seven years have been “challenging” for the company, which had taken on too many billions of dollars of debt just before the financial world collapsed.

Parts of Caesars have been in bankruptcy the past few years as it has tried to salvage what today is a going concern, a gaming company that employs tens of thousands of Nevadans and, unfortunately, has almost equal billions of dollars of debt. Something has to give. That is why the Caesars folks chose the bankruptcy route.

The specifics of what Harry is trying to do are not as important — in fact, an explanation can cause one’s eyes to glaze over — as the result of his actions should he succeed. Here is the issue in simple terms, emphasis on simple.

For 75 years, the Trust Indenture Act passed by Congress has provided the framework for creditors and companies to negotiate changes to their agreements. When companies go into bankruptcy court, the law encourages those who owe money and those to whom the debt is owed to work it out among themselves, only turning to the courts should negotiations fail. The hurdle needed was a majority of debtholders agreeing on behalf of all the creditors in a certain class. In other words, unanimity was never required and, frankly, almost always impossible to achieve.

Recently a couple of court decisions have turned the concept of majority rule on its head by allowing the smallest of financial players to hold major bankruptcies and major lien holders hostage to what can almost always be described as financial blackmail.

That is what happens in bankruptcies: Investors buy debt for pennies on the dollar, then hold up the proceedings for more pennies until someone relents. It is always about money!

In the case of Caesars, however, it is most importantly about jobs. Nevada jobs. Because if the law as written is allowed to stand as the court has only recently interpreted it (overturning 75 years of precedent), the sharks will eat their young and Nevada workers will most likely pay the price.

So Harry has acted. He is trying to attach language to a bill that will reinstate the intent of Congress when the law was written, in a sense overruling the judicial activism that has changed the meaning intended by lawmakers.

We all know the Republicans rail against judicial activism, so this is an issue dear to their hearts even though they must hate it that Harry Reid is doing their bidding this time. The curiosity here is that it is the most liberal wing of the Democratic Party causing the biggest fuss. Even though the people who will pay the extorted price will be working men and women.

I know we are living in crazy times, but this is nuts. I’ll bet that if you get them in a room and promise them anonymity, both the unions and the chamber of commerce will applaud what Harry is doing. That “agreement” should tell you all you need to know about the need for Harry’s actions. Thank goodness he is the kind of fellow who will stick to his guns when he believes he is doing the right thing, especially for the right reasons.

The question should not be why is Harry Reid doing this but why isn’t every senator back there doing the same thing?

Brian Greenspun is owner, publisher and editor of the Sun.

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