Sandoval breaks bank silence…barely

Republican gubernatorial candidate Brian Sandoval on Wednesday broke his silence over a banking bill he sponsored in 1997, but he didn’t have much to say.

"I was the sponsor of the bill," Sandoval said Wednesday on his way into a private event in Las Vegas. "It was a banking bill that simplified the banking law."

The campaign of Rory Reid, Sandoval’s Democratic opponent in the race for Nevada governor, is portraying the bill as something more sinister than Sandoval describes, suggesting in ads and press statements it was a deregulatory bill that contributed mightily to the banking crisis and subsequent economic recession.

In addition to the dubious suggestion that the bill, which passed the legislature unanimously and was signed into law by Democratic Gov. Bob Miller, was a significant contributor to Nevada’s economic woes, Reid wants to burnish the notion Sandoval blindly followed the suggestion of banking lobbyists pushing for deregulation, even though the main lobbyist on the bank bill is now a law partner to Reid at Lionel, Sawyer & Collins.

Reid, who trails Sandoval by double-digit percentage points in public polls, wants voters to think Sandoval is too cozy with lobbyists and cites the bank bill as an example.

He has also attacked Sandoval for having lobbyists Greg Ferraro, who counted JP Morgan Chase bank among his clients last legislative session, and Pete Ernaut as senior advisers.

In a brief interview Sandoval admitted he didn’t write the 1997 bank legislation and he said he couldn’t recall what, if anything, he contributed to the bill.

"I reviewed it, of course," Sandoval said. "But it was drafted by the legislative counsel bureau," the agency that writes all bills in proper legislative language.

Elliot Parker, a professor in the Economics Department at University of Nevada, Reno, says it is a stretch to suggest the banking bill made a significant contribution to the downfall of the Nevada economy.

"I don’t see this bill being the smoking gun," Parker said.

The bill was part of a national wave of financial deregulation that was sweeping the nation in the 1990s, a wave Parker said crested with a deregulation bill signed by President Bill Clinton in 1999. The federal bill, according to Parker, made a greater contribution to the gambling mentality that gripped Wall Street and led to the housing bubble that popped a decade later.

"I see the bigger issue at the federal level not the state level," Parker said.

Ironically, it was Clinton, signer of the 1999 financial deregulation law, who helped Reid launch the attack on Sandoval’s bank bill during an appearance in Las Vegas last week.

Sandoval "sponsored a bill to deregulate banking so that they could do here what happened in New York and all over America. I don’t think that is a good idea," Clinton said during the pro-Reid rally.

The connection between Reid’s law firm and the legislation, the apparent exaggeration of the fallout of the bill and the fact Reid’s Democratic allies supported the legislation aren’t the only problems with the campaign’s effort to paint Sandoval as the candidate who is too cozy with lobbyists.

Reid himself was a registered lobbysist during the 2001 session, working on behalf of the electrical generation division of Pacific Gas & Electric, the mining firm Placer Dome America and two other companies.

At the time Reid was also chairman of the Nevada State Democratic Party and had no problem with lobbying or lobbyists.

"I don’t think (being a lobbyist) presents a problem," Reid was quoted at the time. "I believe in the clients I represent. I will do what I can to help the party and I believe in the issues I am lobbying on. Lobbyists are part of the process."

Another problem with Reid’s push of the Sandoval-lobbying meme is the tactics the campaign used in one of their ads.

The Reid campaign sliced and spliced clips from an interview with Sandoval on Nevada Newsmakers to make it appear as if Sandoval said something he didn’t when responding to a question from host Sam Shad about Ferraro and Ernaut.

The ad cuts back to Nevada Newsmakers and feature a clip with host Sam Shad asking Sandoval: "Are they running your campaign?" Sandoval responds in the clip: "Yes. They’re folks that I trust."

But that’s not how the sequence unfolded on the original show.

In the unaltered clip, Shad asks: "Are they running your campaign?"

Sandoval responds: "Yes." He then quickly corrects himself and says, "They’re not running my campaign but they are advising my campaign."

The statement, "they’re folks that I trust" that appears to follow the "yes" response in the Reid ad is from earlier in the interview when Sandoval was discussing Ernaut and Ferraro.

The statement "they’re not running my campaign but they are advising my campaign" is omitted from the ad.

Although pundits have criticized Reid as a clearly flawed messenger for anti-lobbying diatribes and the selective video editing, it is unlikely the attacks will go away anytime soon.

Brendan Nyhan, a political scientist at the University of Michigan, says voters don’t typically do a good job discerning between correct and incorrect information in political attacks.

Nyhan, who has studied how people respond to phony and exaggerated political claims, says that means political consultants have little incentive to stick to the truth.

In fact, journalistic scrutiny can even help a candidate burn false information into the public consciousness, Nyhan said, something he calls the "free media twist."

"Take the charge, add a little layer of nonsense on top, and then you get more free press out of the ad," Nyhan said. "It works."

Nyhan said he wasn’t surprised Reid would use such a tactic, as he trails Sandoval in the polls and Democrats facing an angst-ridden electorate aren’t likely to have any luck with a positive message.

"The Democrats are throwing in the kitchen sink. It is a tough environment out there, especially for a Reid," Nyhan said. "His dad is in a dogfight and Democrats across the country are on the run. The positive message is not such a great one right now. So you try to disqualify your opponent."

Reid’s campaign has stuck to their guns on the issue, insisting the case they’re building against Sandoval as a special interests tool holds water.

"Everything in the ad is Brian Sandoval in his own words," Reid campaign spokesman Mike Trask said. " And again everything in the ad is fair and true."

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