STEVE WYNN ON BAILOUT: ‘GOVERNMENT SHOULD NOT BUY ALL THE PAPER’

Casino developer Steve Wynn addressed the American financial crisis in a wide-ranging interview Wednesday with Vegas Confidential at Wynn Las Vegas.

Here are Wynn’s comments in their entirety:

“We’re in a spot here and we have to extricate ourselves from the spot we got ourselves into and when I say ourselves, the citizens, the businessman, bankers and government.

“There’s no specific villain. You have to discount the political jibberjabber with fingerpointing. To get into fix like we are in the United States today, and its not just confined to the United States, everybody has to get in the act.

“You’ve got to sign loans you know you can’t repay, you’ve got to buy homes you can’t afford, you’ve got to buy a company at a price that’s too high, you’ve got to keep thinking you don’t have to be responsible for the deals you make; you can pass it on to someone else. And finally there’s no one else to pass it. You know it’s like musical chairs. The music stops and there’s not enough chairs. Then here we are, all of us holding the bag to mix the metaphor a bit. It’s Monday morning; we’ve got to pay for the weekend party.

“It’s going to be uncomfortable for everybody. This is not something Uncle Sam can come to the aid of the liquidity crisis. Not Uncle Sam nor anyone else can no more escape the consequences of this correction than we can avoid sunrise.

“We’ve been living on credit way, way past our ability to pay it. So a lot of money is going to get lost because a lot of money isn’t going to get paid back. And the extent that the federal government steps in, wisely or unwisely, depending on how they do it, our dollar is going to decrease. So it’s going to be more expensive to buy a barrel of oil. This is what happens., We’ll survive.

“Hopefully we’ll learn some lessons and be more careful next time. But we lived for decades where 60 percent of our gross domestic product – which is what we’re worth as a country and a society -- 60 percent of our GDP went into consumption. In the last 10 years it’s been 70.

“It’s not because our underlying growth or size increased, it’s because we could get credit card debt and ridiculous home equity loans which were fictitious and so we hocked tomorrow and the day after tomorrow. Now it’s time to pay up. And we’ll lose some options because of it but we’ll survive, we’ll be OK. The world is not coming to an end despite what all the politicians say.”

Asked if he would vote for the bailout bill, Wynn said, “I haven’t read the version that’s before Congress. I have a strong personal belief the government should not buy all the paper. I think the government should restore the liquidity by inserting the preferred stock into the system but make the banks and institutions clean up their own mess before they ever see a dime of profits, distribution or special bonuses. That’s fancy stuff you do when you do a good job.

“So the price of the institutions will go down, they will survive, the new owners will take over that have a different point of view and they won’t be interested in fees. They’ll be interested in making loans that get paid back. They’ll be interested in doing the kinds of things we associate with prudent business and personal management. We’ve lot some of that in the past. And all of us that did it we are not dumb people.

“Listen, if someone offers to lend you 100 percent on a house, you’ll take it even if it looks like it’s too much of a stretch to make your payments. Someone says you’re $250,000 home is worth $300,000 or $500,000 and he’ll lend you all the money, you’ll take the money. If bankers and businessmen are getting paid not for the prudence of their transactions but merely on the size of the transactions, and on this great size they get bigger fees, well any intelligent person will make a bigger deal and get a bigger fee even though it’s short-term pleasure for long-term pain.

“It takes something like this to get you over that bad habit. It’s tough on people though, it’s tough on middle American and working class people in America who were the buying power of the U.S. dollar. Their cost of living escalates faster than their boss’s ability to pay them, faster than the money they can make. It’s a burden on people; it’s sad. It’s hard to fix it, it’s painful and I hope we can stop doing it.

“I hope we have a group of leaders who are insightful and intelligent enough to tell the American public the truth. We don’t often see that on television. Usually leaders tell people what the pollsters tell them what the people want to hear. Then the people will vote for them. Well, what’s the point of winning if you’ve got to preside over the kind of mess we’ve got now.

“The next president of the United States is going to have a face full of misery and he’s not going to be very popular. No matter what somebody says during the campaign there are no goodies to give away. There are no goodies that someone else is going to pay for.”

--NORM CLARKE, Vegas Confidential