Mitt Romney continues to portray himself as a gifted
businessman; but is he? Slick Mitt appears to have enjoyed Bain and Company’s
bailout by the FDIC when the company was on its way to bankruptcy! Yes,
bankruptcy.
The owner of the company Bill Bain and his top executives
drained the company of most of its capital assets, stealing them for their own
greedy desires sending the business into a tailspin. That is when Bain decided
to have Slick Mitt come to the rescue with a plan. And that plan was to scam
the FDIC into a bailout, ultimately hitting on the taxpayers through bank fees
for the cash and a Bain bonus bonanza.
In Rolling Stone’s September 13, 2012 edition, Matt Taibbi
(MT), one of the nation’s best investigative print reporters, and Tim Dickinson
(TD) wrote terrific pieces on the Romney bailout of Bain and Company. This post
will summarize and extract pieces from those great articles. I will use my copy
of the magazine to reference the story of just how Mitt Romney never built that, which he believes is IT.
To take a phrase from Bill Clinton: “ It depends on what the
meaning of the word ‘that’ is.
Mitt Romney never built anything in his life. What he
created were the very financial smoke and mirrors transactions that brought
this nation’s economy to its knees leading up to the Great Recession of 2007-8.
Had the FDIC not stepped in offering a bailout of the business, it would have
gone into bankruptcy leaving investors holding worth-less paper sending Slick
Mitt, and Paulnocchio to look from the outside into the Tampa RNC convention
hall wishing they could be there, too.
Instead of building cars, as his father did, and airplanes,
tractors, machines, and products as other Americans have done, Slick Mitt built
swaps, collateralized debt obligations, and other toxic financial products to
sell to rich customers. Instead of building new companies, in order to make a
product made by American workers, for American consumers, he took out massive
bank loans and used them to acquire existing firms, liquidating every asset in
sight and leaving the target companies holding the debt. (MT)
As we all recall, it were similar shysters dressed in Romney
outfits bringing $2-3 million dollar bonuses for selling crap to managers
managing retiree retirement funds, and mortgages that sent the economy into a
nosedive. And, Romney was a symbol of it, as well as an actor on the stage of
immorality. Romney was a takeover artist who now wants to takeover the White
House in order to takeover the process which would likely spin the nation into
another Great Recession.
What Matt Taibbi found out was that in spite of the
hocus-pocus financially destructive takeovers that Bain Capital engaged in,
they, nevertheless, made lots of money for their investors between 1984 to
1998. Had those same investors invested in the stock market, they would have
come out earning the same returns—somewhere around 30% per year.
The only ones who profited in a big way from all the
job-killing debt that Romney leveraged were Mitt and his buddies at Bain, along
with Wall Street firms like Goldman and Citigroup. Barry Ritzholtz, author of
Bailout Nation, says the criticisms of Bain about layoffs and meanness misses a
more important point, which is that the firm’s profit producing record is
mediocre, especially when set against all the trouble and pain its business
model caused. (MT)
Here is a sample of Romney’s business model:
“A private equity firm like Bain typically seeks out
floundering businesses with good cash flows. It then puts down a relatively
small amount of its own money and runs to a big bank like Goldman Sachs or
Citigroup for the rest of the financing.
(Most leveraged buyouts are financed with 60 to 90 percent borrowed
cash.) The takeover firm then uses that borrowed money to buy a controlling
stake in the target company, either with or without its consent. When an LBO is
done without the consent of target, it’s called a hostile takeover.
Romney and Bain avoided the hostile approach, preferring to
secure the cooperation of their takeover targets by buying off a company’s
management with lucrative bonuses. Once management is on board, the rest is
just math. So if the target company is worth $500 million, Bain might put down
$20 million of its own cash, then borrow $350 million from an investment bank
to take over a controlling stake.
But here is the catch. When Bain borrows all of that money
from the bank, it’s the target company that ends up on the hook for all of the
debt.
Now, your troubled firm—let’s say you make tricycles in
Alabama—has been taken over by a bunch of slick Wall Street dudes who kicked in
as little as five percent as a down payment. So in addition to whatever
problems you had before, Tricycle Inc. now owes Goldman or Citigroup $350
million. With all that new debt service to pay, the company’s bottom line is
suddenly untenable. You almost have to start firing people immediately just to
get your costs down to a manageable level.” (MT)
And, the interest payments just drain the profits right out
of the company.
“Fortunately, the geniuses at Bain who now run the place are
there to help tell you whom to fire. And for the service it performs cutting
your company’s costs to help you pay off the massive debt that it, Bain,
saddled your company with in the first place, Bain naturally charges a
management fee, typically millions of dollars a year. So Tricycle Inc. now has
two gigantic new burdens it never had before Bain Capital stepped into the
picture: tens of millions in annual debt service, and millions more in
“management fees.” Since the initial acquisition of Tricycle Inc. was probably
greased by promising the company’s upper management lucrative bonuses, all that
pain inevitably comes out of just one place: the benefits and payroll of the
hourly workforce.
Once all that debt is added, one of the two things can
happen. The company can fire workers and slash benefits to pay off all its new
obligations to Goldman Sachs and Bain, leaving it ripe to be resold by Bain at
a huge profit. Or it can go bankrupt—this happens [with] seven percent of all
private equity buyouts – leaving behind one or more shuttered factory towns.
Either way, Bain wins. By power-sucking cash value from even the most rapidly
dying firms, private equity raiders like Bain almost always get their cash out
before a target goes belly up.” (MT)
This is what Slick Mitt meant when he said in his
presidential nomination acceptance speech that, “I will help your family.”
What Mitt Romney has done is to ‘saddle companies with
nightmarish debt and assign the crushing interest payments not to Bain but to
the children of the company’s workers and their children who would be left
holding the financial note long after Slick Mitt said his good-byes.’ (MT)
“Which brings us to another aspect of Romney’s business
career that has largely been hidden from voters: His personal fortune would not
have been possible without the direct assistance of the U.S. government. The
taxpayer-funded subsidies that Romney has received go well beyond the humdrum,
backdoor, welfare-sucking that all supposedly self-made free marketers
inevitably indulge in.” Romney siphoned off an incredible $1.5 billion in aid
from the U.S. Treasury as head of the 2002 Winter Olympics in Salt Lake—a sum
greater than all federal spending for the previous seven U.S. Olympic games
combined. Romney, the supposedly fiscal conservative, blew through an average
of $625,000 in taxpayer money per athlete—an astounding increase of 5,582
percent over the $11,000 average at the 1984 games in Los Angeles. In 1993,
right as he was preparing to run for the Senate, Romney also engineered a
government deal worth at least $10 million for Bain’s consulting firm, when it
was teetering on the edge of bankruptcy.”
And, don’t forget that without a provision in the federal
[tax] code, companies like Bain would not be allowed to deduct the interest on
the debt they use to acquire and loot their targets. (MT) So, Mitt, did you
actually build that? Or, did the government give you some help along the way?
Speaking of help along the way, let us now explore how the
FDIC bailed out Bain. Government documents on the bailout obtained by Rolling
Stone magazine showed that the legend crafted by Romney that he was a success
in business is basically a lie. Bain and Company was actually a disaster around
November 1993, leaving the firm so financially strapped that it had “no value
as a going concern,” as was reported in the documents. Even worse, the federal
bailout ultimately engineered by Romney screwed the FDIC out of at least $10
million. And, in an added insult Romney rewarded top executives at Bain with
hefty bonuses at the very moment that he was demanding his handout from the
Feds. (TD)
Romney’s firm owed the government $30 million in bailout
money, but he manipulated the FDIC and others so badly that he only paid back a
small portion. Here is how it all came down:
“The FDIC agreed to accept nearly $5 million in cash to
retire $15 million in Bain’s debt—an immediate government bailout of $10
million. All told, the FDIC estimated it would recoup just $14 million of the
$30 million that Romney’s firm owed the government. In other words, the bailout
negotiated by Romney ultimately wound up being paid by the American people
through higher fees charged by banks because the FDIC had to recoup bailout
losses through charging banks higher insurance premiums.
How ironic that “a banner at MittRomney.com declared WE HAVE
A MORAL RESPONSIBILITY NOT TO SPEND MORE THAN WE TAKE IN. (TD)
When it comes to presidents who improved the economy of the
nation, we can look at those who dedicated their lives not to business in the
private sector, but to those who dedicated their lives to working in the public
sector: FDR, JFK, Bill Clinton, and Dwight D. Eisenhower. When we look to
presidents who were in the business of business, and ended up damaging or
destroying the economy, we can look directly to Herbert Hoover, George Herbert
Walker Bush, and LilboyBush, all of who were involved either in finance, or big
oil. Now we have Slick Mitt, who touts his expertise in business, which is
beginning to prove that Emperor Wannabee has no clothes. He had to beg for a
bailout of Bain and Company; and, he out spent other Olympic committee
chairmen, while portraying himself as a fiscal conservative.
Now, we are reading that Bain is being investigated by the
Attorney General of New York for possible tax fraud. Hum—is Slick Mitt really
qualified to be president? Slick Mitt accuses President Obama for not being
qualified to be president because he had no business experience, yet it appears
that Mitt’s qualifications don’t give him any bragging rights whatsoever.
Actually, it seems he was a slight-of-hand financial artist. Hey Mitt, show us
your tax returns? Let the American people see for themselves what kind of
business person you actually were.
What this bit of hypocrisy indicates is that Mitt Romney is
a full-blown sociopath. He makes the rules fit for him at the expense of other,
including the entire nation. Mitt Romney has no moral code. He has no ethical
code. He portrays himself as a religious person, but he fails to follow the
guiding principles of morality and ethical integrity that such a true believer
would follow.
Mitt Romney is basically a scorched Earth, one-dimensional
fake.
A reason for all of this could be found by listening to this
podcast on “limits”.
In the final discussion of the show, they were discussing if
the mind has limits to retain data, and if the mind can capture insight into
that data.
It is my opinion that Mitt Romney lacks total insight in the
struggles of middle and lower income families. He has absolutely no insight
into the problems of real people. He only sees the world in turns of winning
and losing. It is an either/or phenomenon. A black and white viewpoint. The GOP
aligns with the Romney perspective---no insight in the real struggles and
plight of the 99%.
This is what makes Obama different from Romney and his followers.
We are in trouble!!
Here is more:
Mitt Romney Tax Returns May Have Employed Legally Dubious
Maneuvers, Tax Experts Say
(http://eye-on-washington.blogspot.com)
