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Wednesday, April 29, 2009 | 4:42 p.m.
Fontainebleau Lawsuit
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Another Strip project is in danger of shutting down. Find out what the future holds for Fontainebleau. Plus, two banks with a presence in Las Vegas report First Quarter earnings.
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Fontainebleau Las Vegas
The national AFL-CIO today criticized several big banks that are being sued over their reported refusal to fund $790 million needed for construction of the $2.9 billion Fontainebleau resort on the Las Vegas Strip.
"It is unfortunate and disdainful that Bank of America, JP Morgan Chase and several other banks have decided to throw thousands of current and future Nevada jobs into jeopardy by terminating their revolving credit facility to Fontainebleau Las Vegas,'' the union said in a statement from Washington. "We are troubled by allegations that their action had nothing to do with a default and everything to do with their desire to allegedly renege on their contractual commitment to Fontainebleau Las Vegas.''
The banks were sued last week by Fontainebleau, which is planning to open this fall, after allegedly declaring a default on the part of Fountainebleau.
Nevada Sen. Harry Reid and Congresswoman Shelley Berkley earlier expressed concern over the funding issue, and this week Bank of America said it was in talks with Fontainebleau about financing for the project.
Fontainebleau spokesman Dave Satterfield said Wednesday that Fontainebleau remained in talks with Bank of America, but he was not sure if other banks were participating.
"I don't know if anyone else is at the table," he said.
The AFL-CIO statement from its Building and Construction Trades Department continued:
"Fontainebleau Las Vegas paid these banks tens of millions of dollars in fees to establish the loan agreement so that it would be sure to have the funds as the project neared completion. The banks' failure to meet their commitment to provide the funding is very troubling. Perhaps even more troubling is the fact that several of these banks together received tens of billions of dollars from the federal government's Troubled Asset Relief Program ("TARP"). Bank of America and JP Morgan Chase collectively received more than $70 billion in TARP assistance, and Deutsche Bank, another Fontainebleau Las Vegas lender, received more than $5 billion through AIG. These funds were provided at taxpayers' expense to ensure that credit was available for worthy projects such as Fontainebleau Las Vegas.
"The banks cannot have it both ways. They cannot, on the one hand, take taxpayers' money for the intended purpose of increasing the flow of credit, and then turn around and destroy thousands of jobs by reneging on their loan commitment. We strongly urge these banks to restore funding to Fontainebleau Las Vegas so the project can be completed and remain a catalyst for an economic revival in a struggling Nevada economy.''
The union said the project now employs 3,300 union workers and that once opened, the casino-resort is expected to employ more than 4,000 union workers among approximately 6,000 jobs directly associated with the facility and another 2,000 estimated ancillary jobs in the community.
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Everybody knows the Union loafers are headed for the end time-soon the halls will be overrun with the whining and complaining unemployed. The business agents will be busy hiding out at PT's and the like. Yet we also know the workers won't have saved a dime in the good times. You can only put so many people at the airport and Oscar's shrine. So let these people finish whatever they're working on, and prepare them for the real world. 4-5 years of unemployment can sure open your eyes-and your wallet....
Thinking creatively, it is to the economic advantage of the construction unions' members that construction of the Fontainebleu be finished. Bank of America, JP Morgan Chase, Barclays Bank, Deutsche Bank and the other lenders involved in refusing to the fund the revolving line of credit are interfering with the union members prospective economic advantage.
That is a tort, and worthy of a lawsuit if the construction unions can satisfy themselves that there was no default on the Fontainebleu line of credit. If there was no default, then the banks had no "privilege" to interfere with the prospective economic advantage of the union members.
So, I'd like to see the construction unions drag these banks into a Nevada court, force depositions of the bank decision makers, force production of all of the communications between the banks, and otherwise teach these banks a lesson which will surprise them, and which they will never forget.