Sen. Reid City Center Commercial

The following was submitted to the Las Vegas Review-Journal:


“That man called every CEO of every bank that I know and said, ‘Look, this is important to my state. Get it done,’” MGM Mirage CEO James J. Murren said of Sen. Harry Reid in a television commercial that attempts to credit Reid for saving City Center. The real history of the project indicates that he is either exagerrating what transpired or unmasks him as a political cutthroat who uses the power of the state to strong-arm private citizens and companies into perpetuating the lending practices that led to our nation’s financial collapse.

The ad would lead you to believe that hapless Murren languished by the phone waiting for the evil bankers to return his calls. Harry Reid, hero of the story, wakes from his slumber and demands that the Scrooge McDucks of the banking world, rolling in their piles of cash and gold, bag up the treasure and ship it to MGM. As if by magic City Center and 20,000 jobs were saved but the real history shows that banks were already deeply committed to the project and demanded that the developers, including MGM, commit more of their own money to City Center.

Perhaps Sen. Reid has forgotten that banks don’t print money. Investors and depositors fund the banks, which in turn, make loans to homeowners and developers. As recent history has demonstrated, they must be careful to scrutinize the ability of borrowers or the banks themselves are prone to failure. Has Senator Reid learned nothing in the last 18 months? Apparently not, because his own ad makes the claim that he used the power of his office to pressure banks into making loans to a project whose partners were embroiled in a legal dispute.

Earlier this year MGM reported that the company was in serious financial trouble which was a surprise to Dubai World, its partner in City Center and subsidiary of the Dubai government. City Center was also facing cost overruns as the original estimated cost of $4 billion swelled to $11 billion as the demand for and value of the 2400 condos they were hoping to sell were rapidly deflating. Additionally construction defects were found in The Harmon, one of the buildings in City Center, which meant it could only be built to 28 stories instead of the intended 49. MGM eventually cancelled the condominium portion of the building and used much-needed cash to return deposits to the holders of cancelled sales contracts.

By March 27th Dubai World had already stopped contributing their share of construction costs and sued MGM citing mismanagement. It was feared that in a short time City Center would shut down and thousands of construction workers would be laid off.

On April 10th the project was saved when Dubai World dropped its lawsuit and the partners agreed to banks’ demands. Accounts of the transaction show that the partners in City Center intended to complete construction but were forced by their banks to contribute more cash as a pre-condition. No mention was made of Harry Reid’s role in saving the project at the time.

We don’t know what Sen. Reid did during the two weeks when City Center was at the precipice, but he claims, “Some said I shouldn’t have pushed so hard. But with 20,000 jobs at stake, I’d do it all over again.” A flyer produced by Reid’s campaign reads, “When he personally told the banks threatening to shut down City Center construction that Nevada couldn’t afford to lose those jobs, they heard Harry Reid loud and clear.”

It is clear that it was in both the banks’ and the developers’ best interests to save City Center and they didn’t necessarily need prodding from Sen. Reid to save their own skins. One of two things happened: Either Sen. Reid applied pressure to the banks and forced them to make a deal that was against their interests, or he did little and the dispute was resolved among the parties themselves.

Nevadans deserve to know who he pushed and how he pushed them. Did he demand that banks loan money to City Center before its partners resolved their differences, or perhaps force bankers to ignore lending regulations? If he made such demands, what did the banks have to fear from Reid if they failed to agree to make such loans? If such threats had been made do they rise to the level of illegality?

It is also possible that this is political grandstanding and is Reid taking credit for something he had little or nothing to do with. After all, MGM and Dubai World had to produce more of their own money before the banks would continue funding, so perhaps Reid’s role was superfluous. In any case, it is revealing of the character of a man who has been so filled with the arrogance of power that he thinks he can tell us all what to do with our money.

If Reid is so brazen to pick up the phone and tell bankers, who hold in trust the savings of millions of people, exactly what to do with their money, what restraint does he show when he tells you how to live your life?

I am pleased that City Center will be completed and think it’s extremely fortunate for the new hires. I congratulate the parties involved for resolving their differences. Sen. Reid, however, should clarify his role in the funding of the project and reveal the nature of the threats he claims to have made to private citizens.