Bain

How Romney ‘retroactively retired’ from Bain: 4 takeaways

Mitt Romney’s predilection for secrecy may turn out to be a major problem for his campaign…

The Week

Team Romney tries to explain how he was technically the CEO of Bain Capital for much longer than previously stated, but its story only further muddies the waters

Under attack from President Obama’s re-election campaign, Mitt Romney has been forced to defend and clarify his tenure at Bain Capital, the private equity firm he founded. This weekend, a top aide, Ed Gillespie, claimed that Romney “retroactively retired” from Bain in 1999, even though SEC documents show that Romney was the CEO of Bain through 2002. Romney’s departure date is considered important because Bain, which made huge profits buying out other companies, has been accused of forcing its properties to lay off workers and outsource jobs between 1999 and 2002. Romney claims he made no day-to-day decisions at Bain after 1999, but new reports continue to surface suggesting that Romney did indeed maintain ties to the company. Here, 4 takeaways from Romney’s efforts to defuse this increasingly compromising issue:

1. Romney has failed to put the issue behind him
Gillespie “didn’t do his boss any favors,” says Caroline Bankoff at New York. The claim that Romney “retroactively retired” is a “laugher, even by Washington standards,” says Democratic strategist Bill Buck at CBS Boston. Gillespie’s unique phrasing, which suggests that Romney is “taking advantage of some kind of loophole in the space-time continuum,” will hardly quell the insistent questions about his departure date, says Steve Benen at The Maddow Blog.

2. Romney is coming off as slippery
“Retroactive” may technically be the “correct way to characterize Romney’s retirement,” since the campaign claims that his involvement in the 1999 Salt Lake City Winter Olympics evolved from a temporary leave of absence to a full-time job, says Steve Kornacki at Salon. But politically, the phrase is “slippery and comically legalistic, sort of like Bill Clinton expounding on the meaning of the word ‘is,’ or John Kerry explaining how he ‘actually did vote for the $87 billion before I voted against it.’” The line “could encourage casual voters who know little or nothing of the Bain story to assume that Romney is trying to cover his tracks for something embarrassing.”

3. Romney supported outsourcing before 1999
Bain was a pioneer in the outsourcing trend well before 1999, says Alec MacGillis at The New Republic. The layoffs and actual outsourcing may have occurred after his “retroactive” departure, but “for many of the investments in question the line traces very definitely to the pre-’99 period.” Indeed, Bain invested “heavily in firms that did not simply send some jobs overseas but specialized in offshoring.” In this respect, it really doesn’t matter whether Romney left Bain in 1999 or 2002.

4. Romney must take responsibility for Bain
Romney should acknowledge that “Bain was in the business of making companies more efficient and profitable,” which sometimes necessarily led to downsizing and outsourcing, says David Frum at CNN. It may not be pretty, but “it’s precisely the relentless search for profitability that causes economies to grow in the first place.” It’s an argument that “is not only convincing but has the additional merit of being true,” and it’s certainly better than letting Gillespie and other aides blast his “own side with lethal friendly fire.”

BREAKING FROM BLOOMBERG: Romney’s Bain Yielded Private Gains, Socialized Losses

Daily Kos

DRIP DRIP DRIP - Bloomberg’s title is spot on.  It goes on to say, in essence, that Romney’s type of business experience doesn’t equate to the type of management skills needed to be President of the United States.

Mitt Romney touts his business acumen and job-creation record as a key qualification for being the next U.S. president.What’s clear from a review of the public record during his management of the private-equity firm Bain Capital from 1985 to 1999 is that Romney was fabulously successful in generating high returns for its investors. He did so, in large part, through heavy use of tax-deductible debt, usually to finance outsized dividends for the firm’s partners and investors.

When some of the investments went bad, workers and creditors felt most of the pain.

Romney privatized the gains and socialized the losses.

Oh, Bloomberg isn’t quite finished.   Article author, Anthony Luzzatto Gardner spares no punches.  He goes on to say

What’s less clear is how his skills are relevant to the job of overseeing the U.S. economy, strengthening competitiveness and looking out for the welfare of the general public, especially the middle class.Thanks to leverage, 10 of roughly 67 major deals by Bain Capital during Romney’s watch produced about 70 percent of the firm’s profits. Four of those 10 deals, as well as others, later wound up in bankruptcy.

It’s worth examining some of them to understand Romney’s investment style at Bain Capital.

CASINO CAPITALISM

Enjoy the article.  Gardner shares the details of these Bain deals:

Accuride
American Pad & Paper – Ampad
Dade Internationa
GS Industries
Stage Stores

(Anthony Luzzatto Gardner works at Palamon Capital Partners, a private equity fund based in London, and was director of European affairs in the U.S. National Security Council in 1994-95. The opinions expressed are his.

Continue reading here…

No, Romney Didn’t Leave Bain in 1999

No, Romney Didn’t Leave Bain in 1999

Talking Points Memo Editor’s Blog

A central element of the 2012 campaign cycle has become just when Mitt Romney left Bain Capital. The Romney campaign says he left in early 1999 — in time to get him off the hook for some controversial investments. Factcheck.org backs up Mitt while David Corn and the Obama campaign have brought forward numerous pieces of documentary evidence indicating he didn’t leave until a couple years later.

Now here’s even more evidence that he didn’t leave in 1999 as he now claims.

The gist of the disagreement comes down to this: There’s no question that numerous public filings and some contemporaneous press references say Romney was still running things at Bain after 1999. But his campaign insists that whatever securities filings may have said, in practice, he was so busy running the 2002 Winter Olympics that he actually had no role at Bain after early 1999. That’s possible in theory. But there’s no evidence for it besides self-interested claims by Romney. And there’s plenty of documentary evidence to the contrary. After all, what you tell the SEC is really supposed to be true.

But here’s the thing. I’ve found yet more instances where Romney made declarations to the SEC that he was still involved in running Bain after February 1999. To the best of my knowledge, no one has yet noted these.

The documents go into different aspects of Romney’s ownership of various Bain and Bain related assets. But in both Romney had to say what he currently did for a living.

Here are two SEC filings from July 2000 and February 2001 in which Romney lists his “principal occupation” as “Managing Director of Bain Capital, Inc.”

image content

Romney’s argument is that it doesn’t matter what he said on these SEC filings. Whatever they say, he really wasn’t at Bain anymore. But absent of any evidence, how is it that anyone can be expected to disregard what Mitt actually told the SEC at the time?

New Obama campaign video hits Mitt Romney’s record as governor

Clearly, this is a topic that Mitt Romney does not want to talk about…

Daily Kos

The newest video from the Obama campaign is a four-plus minute indictment of Mitt Romney’s record as governor of Massachusetts—and a reminder that, as he is doing in 2012, Mitt Romney in 2002 staked his campaign on his experience at Bain Capital, saying that his private sector record would enable him to bring jobs to Massachusetts.

But as the video points out, Mitt Romney had a miserable record of job creation in Massachusetts. Under his leadership, the state ranked 47th in the nation.  He now defends that lousy record by saying he inherited a recession, but not only did President Obama inherit an even deeper and longer lasting recession, but an apples-to-apples comparison of President Obama’s and Mitt Romney’s jobs records shows that Obama has had the better one.

The video also hits Romney for failing to keep his promises to get the state out of debt and in not raising taxes and fees. According to the video, the state’s debt increased $2.6 billion during Romney’s one term in office and he raised more fees than any other state in the nation in his first year in office.

The video is clearly targeted at people who are following the campaign closely—it isn’t in the style of a 30-second or minute-long ad—and the testimonials from public officials in Massachusetts aren’t nearly as emotionally gripping as testimonials from workers whose lives were upended by Mitt Romney at Bain. And Bain itself is basically missing from the video, except for the clips at the beginning of Mitt Romney saying in both 2002 and 2012 that his private sector experience will enable him to create jobs. But while the video itself isn’t a summer blockbuster, it does contain all the fundamental elements that we’ll see in attacks on Romney’s economic record in Massachusetts as the campaign progresses.

We’ll probably see other elements of Romney’s Massachusetts record as well—specifically, Romneycare and his flip-flop on abortion—but as far as the economy goes, the video makes the core argument that we’ll be hearing throughout this election: that Mitt Romney’s claim to be an economic savant is no more credible in 2012 than it was in 2002, and the proof is in his record as governor—a record which Mitt Romney, not surprisingly, does not want to discuss.

Romney In 1994 Said Bain Created 10,000 Jobs; Romney In 2012: 100,000

Can we believe anything that “Mittens” says?

Alan Colmes

The number of jobs Romney claimed he created at Bain has changed between 1994 and now.

In 1994 Romney countered similar attacks from Ted Kennedy in his ill-fated Senate race with this ad claiming he created 10,000 jobs. Romney now claims his time at Bain created 100,000 jobs, a number that has been attacked by Democrats.

Democrats point out how Romney is playing fast and loose with the facts.

Mitt Romney, American Parasite

This is an interesting read.  It exposes the real Mitt Romney during his Bain Capital years.

The Village Voice

His years at Bain represent everything you hate about capitalism

It was the early 1990s, and the 750 men and women at Georgetown Steel were pumping out wire rods at peak performance. They had an abiding trust in management’s ability to run a smart company. That allegiance was rewarded with fat profit-sharing checks. In the basement-wage economy of Georgetown, South Carolina, Sanderson and his co-workers were blue-collar aristocracy.

“We were doing very good,” says Sanderson, president of Steelworkers Local 7898. “The plant was making money, and we had good profit-sharing checks, and everything was going well.”

What he didn’t know was that it was about to end. Hundreds of miles to the north, in Boston, a future presidential candidate was sizing up Georgetown’s books.

At the time, Mitt Romney had been runningBain Capital since 1984, minting a reputation as a prince of private investment. A future prospectus by Deutsche Bank would reveal that by the time he left in 1999, Bain had averaged a shimmering 88 percent annual return on investment. Romney would use that success to launch his political career.

His specialty was flipping companies—or what he often calls “creative destruction.” It’s the age-old theory that the new must constantly attack the old to bring efficiency to the economy, even if some companies are destroyed along the way. In other words, people like Romney are the wolves, culling the herd of the weak and infirm.

His formula was simple: Bain would purchase a firm with little money down, then begin extracting huge management fees and paying Romney and his investors enormous dividends.

The result was that previously profitable companies were now burdened with debt. But much like the Enron boys, Romney’s battery of MBAs fancied themselves the smartest guys in the room. It didn’t matter if a company manufactured bicycles or contact lenses; they were certain they could run it better than anyone else.

Bain would slash costs, jettison workers, reposition product lines, and merge its new companies with other firms. With luck, they’d be able to dump the firm in a few years for millions more than they’d paid for it.

But the beauty of Romney’s thesis was that it really didn’t matter if the company succeeded. Because he was yanking out cash early and often, he would profit even if his targets collapsed.

Which was precisely the fate awaiting Georgetown Steel.

H/t: Dennis

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Mitt Romney’s much-maligned career at Bain Capital: An instant guide

This article is reproduced in its entirety from…

The Week

Romney is being called everything from a “vulture capitalist” to a free-market hero. What exactly did he do during his career as a venture capitalist?

Mitt Romney’s critics on both the left and right are attacking him over his time at investment firm Bain Capital. Obama adviserDavid Axelrod and the Newt Gingrich–aligned super PACWinning Our Future each branded Mitt a “corporate raider,” and Rick Perry called Romney a “vulture capitalist.” Conservatives like Rush Limbaugh are hitting back equally hard, criticizing Republicans for attacking free-market capitalism. But getting lost in the politics is Romney’s actual career at Bain. Here’s what you should know about what Bain does, what it doesn’t, and how that might affect Romney’s run for the White House:

What does Bain Capital do?

Bain works on both venture capital and private equity deals. The former typically involves Bain buying a small stake in a promising start-up company and trying to help it grow and thrive; the latter focuses on debt-heavy leveraged buyouts of companies. In those cases, Bain’s goal is generally to restructure the troubled company, which often involves cutting costs — and jobs. In the beginning, Bain was more of a venture capital shop — Romney often highlights Bain’s early $2.5 million investment in Staples — but in the 1990s, it started focusing more on the lucrative private equity side. It’s the private equity deals that have drawn criticism on the campaign trail.

What was Romney’s role?

He was Bain Capital’s founding chief executive, and he led the company until 1999, when he resigned to take over the 2002 Salt Lake City Olympics. Before he was picked to start up Bain Capital in 1984, Romney worked at consulting powerhouse Bain & Co. At least until his unsuccessful 1994 run for U.S. Senate, Romney was by all accounts a very hands-on CEO.

How did Bain do under Romney?

Spectacularly well — for Bain and its investors. The Wall Street Journal examined Bain’s 77 biggest deals from Romney’s tenure, and found that, thanks largely to 10 of those deals, “Bain recorded roughly 50 percent to 80 percent annual gains in this period, which experts said was among the best track record for buyout firms in that era.” Romney himself earned the bulk of his $200 million-plus fortune during these years. The track record for the bought-out companies is a little less rosy, though: Within eight years of Bain’s intervention, 22 percent of these 77 companies filed for bankruptcy or shut down, and another 8 percent did so poorly that Bain’s investment was wiped out.

Is it fair to call Romney a “corporate raider”?

Some private equity firms do take over companies, saddle them with debt, pay themselves hefty management “fees,” then leave the company to die, says Megan McArdle at The Atlantic. But others really do save companies, and jobs. Based on the Wall Street Journalstory, Bain could fit either category, and “people are probably going to believe what they want to believe.” Look, “Wall Street has its share of the vulture capitalists,” says Steven Rattner at Politico, but “Bain Capital is not now, nor has it ever been, some kind of Gordon Gekko-like, fire-breathing corporate raider that slashed and burned companies.”

Did Romney really create jobs?

He claims to have created a net 100,000 jobs, arguing that the people currently employed at Staples, Domino’s Pizza, The Sports Authority, and other companies Bain invested in or turned around outweigh any jobs lost at other companies through the years. But trying to take credit for jobs created by entrepreneurs he advised or through deals he was tangentially involved in doesn’t “pass the laugh test,” says Washington Post fact-checker Glenn Kessler, who awards Romney three Pinocchios for his jobs calculus.

“I have no idea whether Bain Capital created 100,000 net new jobs, and I think Romney was silly to even engage in that debate,” says Rattner at Politico.  The bottom line is that Bain “more than fulfilled its responsibility to a gaggle of investors,” and that — not job creation — is the company’s true purpose.

Will Bain help Romney’s election prospects, or hurt them?

Just like Democrat John Kerry’s war heroics were in 2004, Romney’s company-building business record at Bain is the centerpiece of his bid for the White House, says Dan McLaughlin at RedState. And after these brutal, early attacks, the fear that Bain “will be a political liability is hardly fanciful.” Actually, the fact that the attacks came early will help Romney, says Boris Epshteyn at U.S. News. His spirited defense of free-market capitalism is “making him more popular with conservatives than ever,” and since his rivals are using the same potentially potent attack in January that Obama will use in the fall, Bain will be “old news when it really counts.”

Sources: AtlanticCNNMoneyFortuneNew YorkerPolitico,RedStateU.S. NewsWall Street Journal (2), Washington Post