Tuesday, March 24, 2009 | 6:02 p.m.
- Reid, Ensign made calls to banks for MGM (3-23-09)
- Lawsuit clouds future of CityCenter (3-23-09)
- Moody’s downgrades MGM Mirage, again (3-19-2009)
- MGM Mirage gets debt waiver, swings to quarterly loss (3-17-2009)
- MGM Mirage's cash crunch (3-3-2009)
- The state of our engine (3-1-2000)
- MGM Mirage wants to tap $4.5 billion credit (2-27-2009)
- MGM, Dubai World said in talks with Deutsche Bank (2-23-2009)
Harry Reid's clout as Senate majority leader makes it important that he explain and justify the calls he made to banks on behalf of MGM Mirage seeking loans, an ethics expert said Tuesday.
The Nevada Democrat went to bat for the $8.6 billion CityCenter project on the Las Vegas Strip after one of its developers, casino operator and Reid's top campaign contributor, MGM Mirage Inc., asked the senator to call the banks on its behalf.
Meredith McGehee, policy director at the Campaign Legal Center and an expert on Senate ethics, said she didn't believe Reid broke any ethics rules, but said the senator should be transparent about the calls to avoid perceptions that he inappropriately pressured bankers.
"Harry Reid's not just a senator, he's the majority leader, so that in and of itself raises the stakes of anything and everything he does," McGehee said. "It's not quite like the president calling but it's still bringing the weight of his office to bear for a private interest."
So far, Reid's office has not released a list of the financial institutions contacted.
MGM Mirage has been struggling for months to secure $1.2 billion in financing to finish the CityCenter project, a rare but troubled source of growth and development in a state battered by the recession. CityCenter is billed as the most expensive private commercial development in U.S. history. MGM Mirage has said it plans to hire 12,000 workers for the complex of hotels, casinos, condominiums, restaurants and shops.
Spokesmen for Reid and Sen. John Ensign, R-Nev., confirmed both senators placed telephone calls on behalf of MGM Mirage, a 50 percent partner in CityCenter.
MGM Mirage ranks as the top campaign contributor for both Reid and Ensign, according to the Center for Responsive Politics, which tracks political donations.
The company's executives and workers contributed $152,750 to Reid's campaigns from 2003 to 2009. They contributed $134,000 to Ensign during the same period.
In recent months, Congress has spent billions of dollars to help the nation's banks survive. President Barack Obama outlined a federal budget proposal that calls for spending up to $750 billion for additional financial industry rescue efforts atop the $700 billion that Congress already approved.
Ensign spokesman Tory Mazzola said Ensign talked to the U.S. Senate Ethics Committee on March 13 to receive guidance before making the phone calls.
Reid spokesman Jon Summers told the AP that Reid made an unspecified number of phone calls over the past two months, but did not pressure the banks or ask them to approve the loans.
"Sen. Reid called these banks and asked them to give MGM Mirage a fair shake—to look at the potential loan the same way that they would look at any other business in any other state," Summers said.
Summers said that Reid never cleared the calls with the ethics committee because "we knew it wasn't a problem." The committee is not allowed to discuss inquiries from lawmakers or its response because inquiries are confidential.
"We get calls from constituents every day. Constituent service is the primary reason we are here," Summers said. "We evaluate what options if any exist and what role we can plan in finding a solution."
Douglas MacLean, a philosophy professor at the University of North Carolina, said it's hard to make a judgment about the appropriateness of the calls without being privy to the words used and the tone.
"It seems to me a proper role of representatives in Congress to try and promote commerce in their states," said MacLean, whose research focuses on how values influence government policy. "On the other hand, given the current economic situation, there's probably not a clear line between promoting and coercion."
McGehee said the calls could be considered part of what people expect from politicians.
"As long as he didn't unduly pressure them, threaten them, say 'If you don't do what I want I'm going to withhold legislation that you need or I'm going to make sure you pay a price,'" McGehee said.
MGM Mirage spokesman Alan Feldman said Reid and Ensign were asked to help tell the company's story to the financial community but no one was asked to push for loan OKs on it behalf.
The CityCenter complex has been marred by the recession, construction problems and uncertainty over whether it can be finished.
On Monday, MGM Mirage's partner in CityCenter sued the Las Vegas-based company in Delaware Chancery Court. Infinity World, a subsidiary of Dubai World, said recent statements by MGM Mirage about its financial condition put CityCenter at risk.
Feldman said the lawsuit does not have merit and that the company has enough cash to satisfy its funding obligations to the project.
MGM Mirage has struggled under more than $13 billion in debt as fewer people are visiting casinos and spending less on gambling and entertainment. MGM Mirage chief executive Jim Murren has said CityCenter is the company's top priority along with fixing the company's balance sheet.
The company owns all or part of 19 casinos in several states and Macau, the Chinese gambling enclave. It lost $855 million in 2008 after making $1.58 billion in 2007.