We don’t know all of the details of how Bain conducted its business under Mitt Romney, but we do know that in at least several instances the conduct was to squeeze out cash while leaving behind a failed company. In many other instances Bain helped companies to grow.
In a capitalist system, that process of weeding out weaker companies and reallocating resources may serve a greater good, much as natural selection helps to make the population stronger. In a political candidate running for the presidency in the general election, however, it is potentially fatal.
In response to this entirely legitimate point being raised that a predatory history of investing may not be what we want in the nominee for the presidency, we have a chorus of voices asserting that Newt is attacking capitalism. Some of those voices long have hated and vented venom at Newt, others are less ideological and have reacted as if the entire capitalist system were under attack.
It’s sad to see so many in the Republican Party so incapable of distinguishing between economic and political arguments.
The question all along has not been whether a predatory style of investing should be legal, or whether it serves some larger purpose in our economic system. The question is do we want the entirety of the general election turned into a referendum on Bain, which it will be if Romney is the nominee regardless of whether or by what means the issue is raised in the primaries.
I want the general election to be about Obama, and his movement of the country towards a West European style of socialism. Capitalism, which achieves the greatest good for the greatest number of people, easily should win that argument. Yet it may not because the Republican Party now has equated capitalism to Bain.
Capitalism can beat Obama, Bain cannot.
Update: The other problem with Bain is that Romney’s statements as to job creation are not holding up to scrutiny. Jonah Goldberg notes that Romney’s authenticity problem is worrisome.
Some commenters say it is not right to make value judgments as to Bain, as if criticizing Bain is an attack on capitalism. I think Dan Riehl has it right:
How viable a GOP nominee would Mitt be if he had decided to make a fortune off of running a national string of adult book stores that sold porn and provided peep shows? Or, God forbid, what about a chain of health clinics that provided abortions because, well, there is a good market for it?….
Just because I am able to respect Romney as a great capitalist does not mean I must accept his values in exercising his acumen as one, now that he seeks to be my president.
There are many activities of a capitalst nature, not all of them are equal once one considers the underlying values driving the various individuals engaged in them. I can remain a solid capitalist and still not care for Mitt Romney as a potential nominee because of the decisions he made in his personal wealth creation. And anyone who would say, oh no, you can’t do that, but would reject him on values grounds if he sold porn, or hookers where it’s legal, or provided abortions is simply fooling his, or her self.
Update No. 2: This video is perhaps Newt’s best explanation, which had the hostile Scarborough thinking by the end (note also Newt defends Romney on the “firing” question):
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Comments
We need a modern definition of “Republican”. I suggest: “Those who stare at their own belly-buttons until they go stark, raving bonkers.”
I, too, am saddened by the current Republican reaction. This is one of many issues that Obama and Co. have waiting in the wings for Romney should he get the nomination. He is “the 1%” personified. If this is not tackled and vetted now, it will bury Romney come November.
I saw on twitter yesterday (RT from you, Professor) a logical reaction to this “attacking Romney about Bain is an attack on capitalism” foolishness:
[note – I wrote out the shorthand]
This is a political question, NOT an attack on capitalism. Obama and the left have MADE this an issue, by OWS and Obama’s endless class warfare attacks and demonizing “Wall St.” etc.
Personally, I think it is a double plus that Newt is doing this; not only is he exposing this issue to sunlight for proper vetting, his PAC now owns the rights to this movie, so the left can’t buy it and use it later. Which the would. With glee.
You apparently haven’t been listening to OWS at all, their problem isn’t primarily with capitalism or that their are wealthy people (for some it is, but not the majority), their problem is with the influence that money can buy in politics. Newt personifies that way more than Romney.
I think that the OWS is so fragmented that you can make whatever you want out of it. In this case it’s more acceptable to make it a “money in politics” movement than a crazy bunch of anarchists and socialists, so that’s what the media has done.
Although, even I may casting my bias on it, it could also be just a bunch of people my age who are too stupid to understand how the world actually works.
That’s a fair point. My understanding of OWS mainly comes from conversations with my old HS friends who support the movement. That’s a bias sample on my part, since I argue more forcefully with them on purely capitalist arguments, as I don’t have much of an opinion on the money in politics issue.
Their little posts on facebook are more likely to be about money in politics now, because they have yet to win an argument in favor of socialism and they know I’ll chime in.
@Awing1, I have read enough of your posts to believe you are possibly a troll. I don’t feed trolls.
However, I assure you I most definitely HAVE “been listening” and paying close attention to the OWS crowd (in LA, in NYC, in DC, etc.). Their common mantra has been, over and over ad nauseam that they “are the 99%” and “corporations are bad” that “greedy people” are the problem: a.k.a. “the 1%.”
Go back and watch the videos, read their signs, listen to their “down twinkle” chain speeches and you will get a clue.
I am not ignorant; and yes, your bias is showing. Your “HS friends” don’t know how the real world works, don’t apparently understand that signing a college loan contract means you agree to pay the money back and that NO ONE FORCES ANYONE TO TAKE OUT STUDENT LOANS (yes, I’m shouting a bit).
I took out minimal loans to avoid school debt, paid it back quickly, and KNEW up-front that I was paying for my education. No one – not my parents, not my friends, not the schools, and certainly not the government – owed or owes me a thing. To quote the 2011 bumper sticker of the year:
Student loan repayment is just one issue the OWS crowd whined about being “unfair” because the “evil Wall St. bankers” wanted them to pay back the money they signed and agreed to pay back.
I have worked more years than you probably have lived. And, I have been a liberal leaning young person, so I know the fog of ignorance many float around in, the leftist rhetoric that is ingrained in most of our youth via TV/movies/education, etc. It permeates our society, and has since the late 1960’s.
I know. I’ve lived it.
So, you of course may disagree. But don’t accuse me of not “listening” as if I don’t know what I’m talking about. That is what trolls do.
Is anyone else reading this, or am I just insane? Please tell me someone else is reading this and seeing how completely irrelevant that vast majority of this response is.
“Your “HS friends” don’t know how the real world works, don’t apparently understand that signing a college loan contract means you agree to pay the money back and that NO ONE FORCES ANYONE TO TAKE OUT STUDENT LOANS (yes, I’m shouting a bit). ”
Please, PLEASE show me where I said my HS friends were arguing this. I specifically said their arguments are about money in politics, which has nothing AT ALL to do with student loan repayment.
Huh? Bain Capital controls Clear Channel, the largest conglomerate of radio in the U.S. (not to mention the advertising that Bain companies place.) After pulling out from the last presidential race, Romney went on a cruise with hundreds of media people. Romney has spent years promising money and support to various politicians if they back him. And more.
The problem they have, at least from the people I debate with, is primarily (though, of course, not exclusively) with lobbying. The idea that if you have enough money, you can hire a former politician to go and talk with his or her former colleagues and influence them in a way the average Joe cannot. I disagree with this characterization of lobbying, but Newt absolutely personifies it more than Romney.
Versus directly offering politicians money and campaign support?
That’s a fair point. By personification I meant that Newt’s become known for his work at Freddie Mac, which has been viewed largely as sellout for Newt since ideologically he should oppose Freddie Mac. It’s like the quintessential of money being able to buy politics.
For Mitt on the other hand, there is no obvious one ‘money in politics’ issue to go after. Sure he’s had wheelings and dealings here and there, but nothing particularly stands out in the way it does for Newt, or the way “corporate greed” does for Mitt now.
I think you’re making a different point from what Newt is saying. You’re saying, in effect, that Bain is a serious political liability for Romney in the general election even though “[the] process of weeding out weaker companies and reallocating resources may serve a greater good.”
What Newt is saying, in effect, is that voters SHOULD be disgusted by Romney’s work at Bain because of all the workers he victimized in the pursuit of the almighty dollar.
You may be correct that Bain opens Romney up to an attack on anti-capitalist (or, shall we say, “economic populist”) grounds. In fact, that’s undoubtedly true. It doesn’t follow that capitalism SHOULD be villified or that a supposed conservative leader like Newt ought to be doing the villifying.
Free market capitalism IS under attack from the left, who as we know are never loath to let a good crisis go to waste. If Obama is reelected and succeeds in turning the U.S. into Upper Venezuela, I wonder if Newt’s supporters are going to regret that he assisted in the demonization of capitalism.
“What Newt is saying, in effect, is that voters SHOULD be disgusted by Romney’s work at Bain because of all the workers he victimized in the pursuit of the almighty dollar.”
Which is not an anti-capitalist statement on the face of it… unless you want it to be. It could just as well be an ethical argument, which is capitalist, conservative, Republican, and American.
Did Bain’s efforts to clear out smaller businesses improve the respective markets or did it collectivise financial power into fewer hands? If the former, Bain executives were being responsible market stewards; if the latter they were ruthless opportunists. Which narrative do you suppose Democrats would prefer to employ?
What were the decision-making reasons for pursuing those courses of action? Was Bain trying to expand opportunities to compete in various markets or was it merely using its financial power to sweep aside nuisances? Was the objective merely to remove obstacles to economic growth, or was it to line preferred pockets? Again, which narrative would Democrats prefer to use?
Did Bain exercise its financial power purely within the constrains of our highly regulated market system, or did it rent (or outright purchase) government power to expeditiously achieve its goals? Did it function within the constrains of law, or did it find other means? Which is the more capitalist, or free enterprise, model?
In which companies exactly was the conduct to squeeze money out of failing companies when Bain was under Romney’s management? I read the article from WSJ yesterday and, besides apparently being written by someone with little or no understanding of finance, it often cited companies that failed where a portion or even the bulk of the time the company was owned by Bain, Mitt wasn’t in charge.
If these are the best attacks that can be brought up, Bain very well could beat Obama.
On a different point, I do sort of agree that Newt, in launching this attack now, could be doing Mitt a favor. Having Newt and some of the other candidates come after Mitt from an anti-capitalist, economic populist perspective makes Mitt look more conservative by comparison, and shows that his ocmpetition aren’t nearly as conservative as they pretend to be.
Or that they are better free enterprisers than Romney.
If Romney is going to make the foundation of his candidacy his business acumen and success (because Lord knows he can’t make his political background his foundation), then it is absolutely legitimate scrutinize his business ethics, practices, and results.
Vultures have their role in nature, but I don’t want them as a mascot.
Go Rick Perry!
Prof, you’re really surprising me on this one. I understand your argument, and were that it, it’s stop there, but this isn’t the arugment of the Newt-PAC. The Newt-Pac is making an emotionally charged almost class warefare attack on Romney’s time at Bain. Is this what politics have become? Screw conservative principles and Regan’s 11th Commandment, I want to win?
Look at my post yesterday. How is making a value judgment as to Bain’s business practices any different than making a value judgment as to Newt’s consulting. Both were legal, both took place in a capitalistic setting, yet Romney and his supporters did not hesitate to attack Newt on the consulting. Was that anti-capitalist?
I’m not sure the money in politics argument is a strictly capitalist one.
I can tell you the difference. Romney’s attack on Newt’s “consulting” was from a viewpoint that actually makes sense for conservatives. Nobody likes seeing money used that way in politics. (And I’m an academic — you can’t tell me that money like that is what historians get for consulting fees.) Plus, conservatives are generally not fans of the role Fannie and Freddie have played in our recent economic history.
You put the most positive light possible on Newt’s attacks, but it isn’t really accurate to what his PAC is putting out there. Is painting Romney in a bad light because he let some failing companies fail really in tune with conservative principles? Do conservatives really believe in the bailout-happy “only mean people would let a company fail” culture?
Mitt’s attacks on Perry were another story — those were dreadful, and again, not at all in tune with conservative principles. Romney has something to be ashamed of there. That still doesn’t justify Perry returning the favor with the Bain attacks.
Seems to me that Romney’s activities at Bain and Gingrich’s payments from Freddie are both defensible, although Romney’s activities may be defended more easily. Unfortunately, neither has done a terrific job in this regard.
If Romney is the eventual nominee, which looks likely at this point, being attacked over Bain now may sharpen his ability to respond to Obama’s inevitable attacks (let’s hope so). On the other hand, Obama will be able to say that even some Republicans criticized him about Bain; that will be a negative, but I don’t know how much of one if he has a good response.
Couldn’t Romney respond effectively by saying something like this? Bain tried to save many failing companies. In some cases, these companies had to cut some jobs to save other jobs. The alternative was to lose all the jobs, so saving some was better than saving none. In other cases, it was not possible to save the companies as going concerns, and it was necessary to redeploy their assets to other, more productive uses. That’s what makes our standard of living the highest in the world, allocating resources to their most efficient use.
Obama wants to change our system so that huge amounts of resources are wasted on projects the Government decides are best rather than letting markets and businesses make these decisions. Governments all over the world have a terrible record of allocating resources poorly, as exemplified by the U.S. Government’s loan guarantee to Solyndra. Obama’s approach will result in a lower standard of living for all Americans.
“…being attacked over Bain now may sharpen his ability to respond to Obama’s inevitable attacks…”
But Romney supporters (and candidate) are suggesting we shouldn’t question him in the first place. They further contend that by scrutinizing his business history is to attack the free market system, which is ludicrous. The ridiculousness of it inspires a sense of suspicion about Romney (whether justified or not), and further lends to a narrative of an arrogant Romney. It is not dissimilar to Obama 2008.
I don’t pay too much attention to those folks; they obviously have an axe to grind. I’m trying to see what’s reasonable and how things might play out for the rest of the primaries and in the general election. Romney might not be my favorite candidate, but it looks like he might be the nominee and, if he is, I want him to win. In some ways I would prefer Gingrich, but I’m not real happy with his negative push on Romney’s Bain work, just I was not happy with Romney’s negative push in Iowa against Gingrich. I still can’t see where the criticisms of his Bain work have merit and Newt’s work for Freddie doesn’t bother me much either. I just want Obama defeated.
Prof,
Glad you responded! I can (in a certain sense) see your point, except that as I understand the attacks against Newt, they mostly are aimed at the idea that he was lobbying and thus hypocracy as he claims to be anti-lobbyist. Thusfar (at least) Mitt has not claimed to be “Anti-Corperate raiding” so they are different in a sense. (Although Mitt is “Anti-Job Loss” so maybe some comparision is in order?)
The attacks against Newt are of course not entirely defensable. After all had he been consulting them on a way out of the mess (in line with what he has been saying on the campaign trail) they’re be no hyprocracy, and since I’m still not sure excactly what he was doing.
And so, here we stand saying “Well both sides are wrong.” (which diffuses your critique of my critique) But my point is are they wrong in different ways. Or more to the point, on Team Newt, does the framing of the critique of Bain Capital matter. I would say yes. If Newt (or Newt’s PAC) wants to stand up and say “This particular form of Business (Capital Investing) really isn’t helpful exerience to a president, as well it doesn’t show that Mitt knows how to create a job as much as it shows he can juggle some numbers and make a profit even if a company fails.” I’d jump right behind it. Hell I’d probably even be out there making the same argument. But that’s not the framing. The framing used (And make no mistake narrative styling, or narrative abuse in many cases, matters in a situation whereby we’re reduced to emotivist arguments, e.g. politics)is much more “Big bad business man laid me off.” It has class Warefare written all over it.
I will cite evidence in fact, Video right here: http://www.winningourfuture.com/ within 15 seconds it starts the “Certain types of capitalism are bad” argument. At 1:50, you have the infamous “It hurt bad to leave my home…because of a man with 15 homes” line.”
And so I repeat the question. Even if the logical premises of Newt’s argument (that I laid out above, regarding the needed experience) are in and of themselves sound, is the framing of the argument inapporpriate for a republican canidate (e.g. the subtle class warefare rhetoric.) And if so, does that hurt the argument itself? (My answers are “Yes” on both accounts.)
This may be a day late! But Professor, you are equating Newt’s consulting (where he has no experience or value adding) for a government owned bankrupt business as the equivalent to what Romney did at Bain? Now that is a real stretch and sounds just like a lawyer, parsing to get the last drop out of an illogical argument.
I agree with this, and I too am surprised Professor Jacobson is doubling down on this. Gingrich clearly wants the electorate to look at Romney’s time in the private sector as spent doing something unethical. And he’s doing it using the language of the left.
Take some of his statements yesterday and substitute Obama’s mouth instead of Gingrich, and you’d have to change very little. That’s what’s troublesome in all this.
Moreover, in an era of “Occupy Wall Street” we should be drawing a bright wide red line between us and them, not blurring the line with hair-splitting. That the Professor thinks a comparison to running a chain of adult book stores is a winning argument is stunning.
Take some of Romney’s statements in defense and use Obama’s mouth in 2008.
Not “unethical”. Just completely self-interested. In this day and age of global investing, that’s not necessarily good for the landed citizens of one country. How about selling out the U.S. if investing in other countries works better to grow the personal fortune of a self-interested capitalist?
I have no problem with that. If businesses aren’t all out to make money, they will fail. If the business climate in the U.S. isn’t good, businesses going elsewhere will help correct the situation.
And this of course is the difference between selecting someone to lead “our team” and having a pro-game philosophical that is neutral about which team wins. We’re not neutral; we’re selecting our team captain.
Newt and Perry are shooting themselves and the idea of free enterprise by promoting the liberal line on venture capitalism. Santorum is the only one who got it right when asked about Romney and Bain:
“I’m not making it a liability. I believe in the private sector.”
Criticizing Romney’s Bain company is not criticizing the capitalism of free men and markets.
It is criticizing the predatory, crony capitalism of bailouts and enriching oneself with tax payer dollars. Socialism for the very rich. Spreading the wealth from government-bailouts using tax payer dollars to enrich corporate raiders.
See more: http://palin4america.com/2012/01/hello-new-hampshire/
WOW – I’m the 99% post of the day!
Using a Reuters “news” link is probably not the greatest link to use in a “conservative” argument.
How is tearing apart the LEGAL actions of a private firm helpful to the conservative principle of promoting private business over the centralized control concept of progressives?
Using an OWS line is probably not the greatest line to use in a “conservative” argument.
I was condensing hrh40’s veiled OWS speak into actual OWS speak 🙂
…but I think you knew that
And yet you have not actually refuted the point…
Bain Capital took government bailout money to the tune of billions of dollars.
Because Bain Capital had failed in its job of turning around the companies it took over.
So Bain took taxpayer dollars to make sure they didn’t lose their money. After failing to save the companies.
Are you going to refute my argument that:
Since CEO Romney was happy to be on the receiving end of government tax dollars bailout money
Then President Romney will be happy to be on the giving end of government tax dollars bailout money to companies that fail.
This is not the capitalism of free men and free markets.
It is the capitalism of No-Risk Guaranteed-by-Government Bailout Crony Capitalism.
If that’s what some of the OWSers are arguing – though I doubt it, because 99% of them don’t know what what they’re talking about – then they are correct.
hrh40 (aka OWSer)
“Bain Capital took government bailout money to the tune of billions of dollars.”
where are you getting that info?
oh yeah, a Reuters hit piece – *snicker*
except the hit piece didn’t mention “billions”
———-
If you have an issue on his ability to manage then that’s one issue but if you try to play the Democrats game of painting a LEGAL PRIVATE capitalist venture as un-American then that’s another thing.
The PBGC, which is the GSE that paid this “bailout”, has never taken a cent of taxpayer dollars. It’s an insurance company for pensions. Please stop making false statements.
On Mitt Romney’s Defense Of Bain Capital And The Private Equity Industry – Here Are Some Facts
Bain Capital:
Total deals – 22
Deals in default – 5
% of total – 23%
Deals in distress – 5
% of total – 23%
% of deals in distress and default – 45%
http://www.zerohedge.com/news/mitt-romneys-defense-bain-capital-and-private-equity-industry-here-are-some-facts
The two decade bull market was the era of easy money and leverage. “Solid” companies that didn’t leverage up and take advantage of easy money may have fallen behind. “Safe” was no way to compete … instead gambling with leverage was the game. Win and keep profits, or go bankrupt and screw your creditors.
An era of easy money, LBO’s,corporate raiders, mergers and acquisitions made Wall Street big bucks … and look at all the government bailouts we faced partly as a result. I don’t see that as a very ideal model of “capitalism”. Our whole banking system is being backstopped by the government … creative destruction for thee, but not for me.
It reminds me of the era of sports “juicing”, where “everybody’s doing it” and that is the way to compete. So the Ruth and Maris home run records are shattered, and everyone is on steroids.
Did Romney come in and offer Harvard steroids to companies that were not sufficiently juiced? Are we now paying for the “sins” of those two decades of juiced leverage, where wealth was transferred to the financial sector? …and now our government is underwriting bankers and connected players, and many are “joking” that DC is a branch office of Goldman Sachs.
That analogy is above my pay grade … but before calling our system, and especially Bain’s role, a real example of “capitalism”, it deserves a closer look. Capitalists should be able to preserve capital for a rainy day … but raiders can take that capital (in high fees or leveraged buyouts).
“Financialization is a term sometimes used in discussions of financial capitalism which developed over recent decades, in which financial leverage tended to override capital (equity) and financial markets tended to dominate over the traditional industrial economy and agricultural economics.”
http://en.wikipedia.org/wiki/Financialization
Recently Corzine took a billion from private investors … still no word how, or if ANY investment is safe. A $600 trillion unregulated derivative market, a trillion in TARP being shifted around by guys like Hank Paulson, another trillion in stimulus tossed around to campaigners … how much does this really resemble capitalism? Tea partiers want that discussion.
Amen.
Good points. And the juicing is fundamentally the fault of big gov’t, e.g., Fannie and Freddie running a pool of trillions of free dollars that unscrupulous folks took advantage of.
The big problem is explaining this to the average voter. The first or loudest story from the MSM will probably coat most minds, and the issue is lost beyond that.
Maybe one way to turn this back on Hussein is to unfold the absolutely criminal bailout / moneygrab of GM. In that case, the unions won and the investors – actual stakeholders – got screwed. That’s Hussein’s vision for America: all investment for profit is evil, and should be taxed or confiscated. If we could get that counter story out there, it would help a lot.
Last night I was listening to Ben Stein on Hugh Hewitt’s show and he had an interesting take. He said that he had spoken to numerous private equity firms, and while Bain’s business model was operating on the edge and they made money by bankrupting companies, that was not their only business model. However, Stein said that he didn’t think that someone who made money in that way (on the edges of honest business practices, however legal it may be) had the right personality to be President.
Just because the home run records were shattered doesn’t mean that juicing was okay or that Sosa’s corked bat was okay. Should Bonds, Sosa and McGuire be elected to the Hall of Fame simply because they gave fans a great summer? Should someone who follows the Bain business model be elected to be President? It’s a good question….
I find it very curious that so called conservatives and libertarians like Laura Ingraham, Neal Bortz, Fox News and others are falling all over themselves to defend Mitt Romney for being taken out of context on the liking to fire people line. Did they do the same thing when Newt Gingrich or Perry was being attacked?? What happened to “this ain’t beanbag?” Sounds like we have a lot more people in the tank for Romney than previously known. When Newt complained about unfair attacks he was called a whiner and a wimp. When Mitt said Perry wanted to end Social Security for the elderly right now, did anyone in the conservative media spend an entire show on how awful and unfair it was? I don’t think so. We’ve had one caucus and today is the first primary and everyone is all up in arms that Mitt would be attacked because it’s supposed to be over already. Attacking his time with Bain is fair game. Mitt should be able to articulately defend himself and make it a non-issue. Do we not think Obama and his minions will use it against him in the most nefarious ways possible? Might as well get it out now. If he does get the nomination, it will be better that it was dealt with now because it will be brought up either way.
Thank you. Well said!
[…] types of business practices can be perceived as a negative in a candidate. He also pointed me to a recent article he had penned on the subject, though I confess I still wasn’t seeing the distinction between that and attacking capitalism […]
If Romney’s Bain Capital involvement is easily defended, he will easily defend it.
If Romney’s Bain Capital involvement is not easily defended, or is indefensible, he will struggle to defend it, and the reason for that difficulty could very well provide important information on someone seeking the White House.
In the meantime, and assuming the Bain Capital thing holds no hidden land mines, Romney may enjoy the spectacle of his opposition chasing ghosts, all the while ignoring issues on which he is definitely vulnerable, such as Romneycare, his record as MA governor, the fact he’s won only one election, etc.
yes, that.
The real problem is: I do not like the choices that I have been given. I want to fire the entire bunch. I am terribly afraid that president destructo will be reelected and we get this batch as a choice!
Take everything you know about the issue under discussion. Now how would the OAF or OFA or whatever spin it? How much support from the MSM would the spin get?
Sucks to be us.
Bain looted the companies it bought.
Must read:
http://www.forbes.com/forbes/2005/0418/060.html
Romney supporters are trying to spin these deals as Bain buying troubled companies and turning them around and then spinning them off. Nothing could be further from the truth.
Bain bought profitable companies, using a little bit of investor money and huge loans taken out by the companies they were buying. They then looted them. Once in control of the companies, they took out huge loans (10’s of millions) for the sole purpose of paying themselves enormous dividends. Bain also paid itself enormous ‘management fees’. These companies were then left to fend for themselves. Their original management typically was gone, given golden parachutes, their balance sheet destroyed by massive new debt to pay the dividends to Bain’s investors.
This is NOT ‘capitalism’. This was legal theft.
They bought companies for the sole purpose of taking out huge loans on the collateral of the company’s assets, they used these loans to pay themselves dividends in the amount of the company’s entire cash on hand and then walked away.
The Dan Riehl argument is a lot like Obama’s favorite tactic of inventing straw men. Of course, there are many kinds of slimy businesses and many types of unscrupulous business practices.
The issue is whether a typical leading private equity firm, as it was led by Romney, did anything unethical or unscrupulous. If not, the issue should fall of its own weight among Republicans.
The fact is that Bain invested in distressed companies and racked up a three to one success rate. It is that simple.
Unfortunately, it’s not that simple. Nothing in life is that simple. We should get it out now and vet it before the general. What are you scared of???
I am not “scared” of anything. If Bain were a rapacious “looter” of businesses, had been accused of fraud or securities or accounting violations, were notorious for shady practices or cheating its partners, or just had failed and lost its investors’ money, then Romney’s association with it would be a big problem.
But Bain was and is none of those things. It is a highly successful investment firm that has raised $38 billion in equity capital which it has injected into some 250 businesses, helping promising startups get off the ground, building existing businesses in need of capital to expand, and working to turnaround distressed companies that were otherwise headed for failure.
It is a solid record, easily defended even against OWS-style attacks from Obama and the Dems.
All good stuff, and I finally see the scrutiny picking up. Perry summed up best when he said “To profit from the failure of a company while sticking someone else with the bill is indefensible”. That is going to be the image of private equity that Obama will paint. Ron Johnson in WI has the right kind of private business background to run for office, Mitt … we’ll see.
What I haven’t seen written about is the next big looming disaster for Repubs with Mitt. The non-monolithic Latino vote (and I hate talking demographics, but you gotta do it).
He is a quiet disaster in this area. I live in S. Florida, and he is not doing well outside of the Cuban community anecdotally, which is reliably Republican. He may squeak by in FL, but will lose everywhere else that it matters, methinks, as well as set the party back.
In fact, he is the worst candidate just about, in that regard, as (a) you know he will abandon any pretense to a conservative viewpoint on immigration the minute he gets nominated – so we get nothing with him, and (b) he gave the Dems the worst quotes on the subject, as he sounds so strong on the topic.
Univision will have a field day.
Its not grabbing headlines now the way Bain is — and I’m happy to have that vetting start — but it is something to look out for.
OK, I watched the ad in Iowa that made Gingrich so angry. But the most salient point to me was that he was fined $300,000 for ethics violation in the House. Did he or didn’t he.
I think that Gingrich’s response attacking Bain Capital is another black mark on his record. Look at Bain’s record over all on how many companies were restored to health and/or created new jobs versus those that ultimately failed. Was Bain out to just lay workers off and sell off assets or was it hoping to apply better management principles? A lot of steel companies went under because they couldn’t afford to pay union wages and retirement packages. They went through bankruptcy and their assets were bought by others and the company was then run without the huge debts occasioned by onerous union contracts, and were made profitable. It wasn’t the same company, but the mills were reopened. I don’t know what the specifics of the firms that Gingrich’s ads were about.
The bottom line here is that I’m not buying the deffense of Newt on this. No company has an obligation to continue losing money just to prop up jobs that are unprofitable. That is Unionthink and I detest it.
Newt is just telling the truth throwing cold water on Mittens’ job creation claims (more pious baloney)
Job creation for the better good was hardly a priority for Bain… compare that to Ronald Reagan’s
genuine desire to bring better to all through the fruits of freedom, fair play, and opportunity.
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