Friday, May 18, 2012

Mitt Romney and Bain Capital

A Brief History of Mitt Romney’s Record of Putting Profits Ahead of People as CEO of Bain Capital

Mitt Romney eliminated thousands of jobs while at Bain.

Mitt Romney eliminated thousands of jobs in his tenure at Bain Capital.

What is Bain Capital? Co-founded by Mitt Romney in 1984, Bain Capital is a classic “strip and flip” shop — a private equity firm that made its money buying businesses and sucking profit out of them by any means possible that often resulted in a stack of pink slips for everyday Americans. As the New York Post reported, during his 15 years as head of Bain, Romney “made fortunes by bankrupting five profitable businesses that ended up firing thousands of workers.”
Here’s how it often went down. Romney’s Bain would buy a company and increase its short-term earnings through firing workers and shuttering plants in order to borrow enormous amounts of money. The borrowed money was used to pay Bain dividends, however, those businesses needed to maintain that high level of earnings to pay their debts. When they couldn’t, that meant plant closures, more layoffs, bankruptcies, and in many cases, the end of the business. Yet these bankruptcies still meant huge profits for Bain’s investors. Furthermore, Bain continued to collect management fees even as companies failed.
Michael Rumbin, a vice president for technology management at Dade told the Los Angeles Times, “My experience at Dade during those Bain Capital years was that it was strictly an investment, not to create jobs.” Rumbin also spoke with Bloomberg in July:
Dade borrowed so much money to make that payment that when sales declined and interest rates rose the company struggled to pay its creditors. Standard & Poor’s downgraded its outlook for Dade Behring to negative from stable. The company later filed for bankruptcy.
“They leveraged this thing to the hilt and got out when they could,” Rumbin said. “We were left holding the bag.”
According to the Boston Globe in 2008: “Romney had chances to fight to save jobs, but didn’t. His ultimate responsibility was to make money for Bain’s investors, former partners said.”
One former official who worked on the labor contracts of the Bain-created company GS Industries told the Los Angeles Times that Bain “bled the company.”
“Bain was demanding certain financial performance with no understanding of what the problems were on the ground,” said David Foster, a former steelworkers union official who negotiated labor contracts with GSI management from 1994 until the bankruptcy. He said Bain “bled the company,” withdrawing cash for dividends and management fees even as circumstances in the steel industry deteriorated.
“If I were looking for effective management of a project, a company or a country, this is exactly the kind of management I would not want to have,” Foster said of Bain. “Bain partners think the profits they made are a sign of their brilliance. It’s not brilliance. It’s lurking around the corner and mugging somebody.”
A recent report from the Los Angeles Times notes Romney’s colleagues admit they were not in the business of creating jobs.
Bain managers said their mission was clear. “I never thought of what I do for a living as job creation,” said Marc B. Walpow, a former managing partner at Bain who worked closely with Romney for nine years before forming his own firm. “The primary goal of private equity is to create wealth for your investors.”
And make money he did — Mitt loads of it. For an eight year period starting in 1987, Romney’s Bain invested 22 percent of the money it raised in five businesses that ended up filing for bankruptcy and walked away with a $578 million in profit. Judging by the photos at the time, finding places to stuff all those profits became something of a joke among the Bain cohorts. Such a display of greed and excess that would make Gordon Gekko — the fictional cut-throat corporate raider in Oliver Stone’s Wall Street — blush. Romney left Bain with a staggering $4 billion in assets.
It’s no wonder Wall Street lobbyists are lining up to throw campaign money Romney’s way today, by far more than any other presidential candidate. Mitt Romney is the poster child for the greed of Wall Street and excess of the 1%. A guy who made hundreds of millions putting profits ahead of peoples’ jobs is exactly the kind of guy Wall Street would love running things in Washington. Mitt Romney would let the Gekkos of the world go back to same greedy and reckless behavior that wiped out trillions in savings and cost millions of Americans their jobs.

Here’s a few examples of “stripping and flipping” companies — sucking cash out of businesses, laying off workers, and eventually hitting bankruptcy all while making investors like Mitt Romney even richer.
The Romney Record at Bain Capital
Read more about Ampad from the 2008 report in the Boston Globe. [PDF]
MSNBC host Rachel Maddow picked up on unaired 1994 campaign ads citing Romney’s record at Bain Capital. In one ad, it cites a Boston Globe report that a company under Romney’s watch collected a $10 million bailout while Bain Capital profited $4 million. Another ad included personal testimonies from former workers who were laid off by Romney’s private equity firm. Watch:
Comedy Central comedian Stephen Colbert discussed Mitt Romney’s record at Bain Capital in a segment called, “The Word.” Watch:

Boston Globe, January 2008: “As Bain slashed jobs, Romney stayed to side”
New York Post, January 2011: “Romney’s past is more a working class zero”
Political Correction, June 2011: “As CEO, Romney Profited While Thousands Of Workers Were Laid Off And Five Of His Companies Went Bankrupt”
Bloomberg, July 2011: “Romney as Job Creator Clashes with Bain Record of Job Cuts”
Politico, July 2011: “The Bain of Mitt Romney’s campaign”
New York Times, November 2011: “After a Romney Deal, Profits then Layoffs”
Los Angeles Times, December 2011: “A closer look at Mitt Romney’s jobs record”

Politico: Opinion and Analysis

These are additional articles to read.
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    Opinion: Three GOP senators respond to assertions in an opinion piece by Sen. Patty Murray.

  • Congrats, grad, you're unemployed

    Opinion: Graduates facing a bleak job market and an uncertain future should start asking why.

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    Opinion: Our transportation network has not kept pace with our exponential growth.

  • Confronting looming 'tax-mageddon'

    Opinion: There's been a conspicuous lack of urgency from the president and congressional Democrats.

  • For U.S. leadership, less is more

    Opinion: It is time for the United States to take a subglobal approach to global problems.

  • All-in-one stop for small business

    Opinion: Far too often, small businesses are impeded by paperwork and bureaucratic red tape.

  • GOP: Real party of U.S. women

    Opinion: Republican women like us would never join a party that didn’t believe in women’s rights.

  • In budget debate, 'past is prologue'

    Opinion: House Republicans are pretending the debt-limit crisis they brought about never happened.

  • U.S. must power up grid overhaul

    Opinion: Support for investment in foundational infrastructure may be the best leadership measure.

  • Why Romney should tap Jindal

    Opinion: The governor has implemented the sort of bold reforms that are needed at the federal level.

  • Facts show Dems are job creators

    Opinion: “In God we trust,” one often repeated maxim says, “all others bring data.”

  • Will women determine 2012 race?

    Opinion: Women may finally redefine presidential politics 92 years after getting the right to vote.

  • The 'Bradley effect' and Obama

    Opinion: The president's team should tread carefully when looking at where he stands in the polls.

  • JPMorgan: Suffering as it should

    Opinion: Banks have always pushed the envelope.

  • The right lessons of JPMorgan fiasco

    Opinion: As attractive as the Volcker rule may look, it has two fatal flaws.

  • Can the FBI understand intelligence?

    Opinion: The challenge has proved difficult for the world's leading law-enforcement agency.

  • Follow Chicago's example

    Opinion: The bold plans are a blueprint for nation.

  • Too little is spent on transportation

    Opinion: Invest in the backbone of our economy to move our goods and people more efficiently.

  • Long-term funding needs to hit the road, Jack

    Opinion: Draconian cuts to the budget are dangerous for transit systems in need of significant upgrade.

  • Fix our roads to help the economy

    Opinion: Spending taxpayer dollars wisely is vital.

The Boldface Names on the Witness List for Gupta’s Trial

May 17, 2012, 12:42 pm

Scott Eells/Bloomberg News

The trial of Rajat Gupta, a former Goldman Sachs director, is scheduled to start on Monday.
The potential witness list has been released for the insider trading trial of Rajat K. Gupta, the former director for Goldman Sachs and Procter & Gamble, and as expected, it is chock full of boldfaced names.

Possible witnesses who could be called to testify — or whose names may come up during the trial — include Lloyd C. Blankfein, the chief executive of Goldman; Gary D. Cohn, the bank’s president; A.G. Lafley, the former chief executive of Procter & Gamble; and Kenneth I. Chenault, the chief executive of American Express.

The trial of Mr. Gupta, the former global head of the consulting firm McKinsey & Company, is scheduled to start on Monday. He is charged with leaking boardroom secrets to his friend and business associate Raj Rajaratnam, who was convicted last year and is serving an 11-year prison sentence.

Goldman is expected to be on center stage during the trial. The government says Mr. Gupta told Mr. Rajaratnam confidential details about Goldman Sachs before announcements were made public, including news of Warren E. Buffett‘s $5 billion investment in the bank at the depths of the financial crisis.

Byron Trott, the former Goldman banker who oversaw the Buffett investment, is a possible witness. Other Goldman executives who may be called to testify are David A. Viniar, the chief financial officer, and Stephen R. Pierce, the head of the bank’s capital markets business. Even one of Goldman’s outside lawyers, Steven Peikin of Sullivan & Cromwell, is on the list.

The government is likely to ask Mr. Trott about the timing of the Buffett investment and how quickly it came together. He also may be asked about how many people knew about it, including the Goldman board.

Mr. Pierce is expected to discuss a secondary stock offering of Goldman stock that Mr. Gupta is accused of passing along to Mr. Rajaratnam.

At a pretrial hearing on Wednesday, the government said that its first witness was expected to be Caryn Eisenberg, Mr. Rajaratnam’s secretary at his Galleon Group hedge fund. She is likely to testify about how frequently Mr. Gupta and Mr. Rajaratnam spoke to each other, according to people briefed on the case.
Witness List for Rajat K. Gupta Trial

The Truth Team 

is a network of supporters of President Obama who are committed to responding to unfounded attacks and defending the President’s record. When you’re faced with someone who misrepresents the truth, you can find all the facts you need right here—along with ways to share the message with whoever needs to hear it.

The many ways Karl Rove’s new attack ad distorts the facts

Following the lead of Americans for Prosperity’s unabashedly false attack ad, Karl Rove’s group American Crossroads is spending $25 million on a deceptive, month-long ad campaign to mislead Americans about the promises President Obama has kept in his first term.

Here’s a quick breakdown of the many ways Rove’s ad distorts the facts and tries to distract Americans from Mitt Romney’s economic record:
  • False: The ad claims that the President has not helped responsible homeowners who are facing foreclosures.
  • Fact: President Obama’s policies have helped over 1.1 million homeowners refinance and take advantage of historically low rates, and spurred public and private efforts to help over 5.9 million people keep their homes through mortgage modification.
  • Romney: Mitt Romney’s only plan to help Americans at risk of losing their homes is, “Don’t try to stop the foreclosure process. Let it run its course and hit the bottom.
Middle-class tax cuts
  • False: The ad falsely insists that the President broke his promise to cut taxes for middle-class Americans.
  • Fact: Under President Obama, taxes on middle-class Americans are near lows not seen since the 1950s. A typical family making $50,000 a year has seen their taxes cut by $3,600 over the President’s first term in office. He also cut taxes on small businesses 18 times, including recently passed tax credits for hiring unemployed veterans.
  • Romney: Romney raised more than $750 million a year in taxes and fees while Governor of Massachusetts, imposing more fee hikes than any other state in 2003 and hitting taxpayers’ pocketbooks as hard as any tax increase and, “less fairly as well.” And even as Romney would cut taxes for millionaires by an average of $250,000, he would raise taxes on 18 million working families.
Health care coverage
  • False: The ad wrongly claims that Americans won’t be able to keep their insurance plan under Obamacare.
  • Fact: Obamacare actually expands access to quality, affordable health care insurance. Most Americans get insurance through their employer, and the law doesn’t change that. There are now incentives that encourage employers to offer and continue to offer coverage to workers. Health reform also will prevent insurance companies from dropping people who have pre-existing conditions or capping coverage.
  • Romney: If elected, Romney promised to “kill” Obamacare on day one, jeopardizing coverage and care for millions of Americans.
Deficit reduction
  • False: Rove’s ad claims President Obama is wantonly increasing spending rather than working to reduce the deficit.
  • Fact: Despite inheriting the largest deficit relative to the economy since the end of World War II, President Obama has put forth a plan to reduce our deficit by over $4 trillion over the next decade. His plan would bring discretionary spending to its lowest level as a share of the economy since President Eisenhower was in office. In fact, spending, taxes, and the deficit are all lower as a share of the economy since President Obama took office.
  • Romney: As Governor of Massachusetts, Romney raised the state’s debt by $2.6 billion—a 16 percent increase. And now, he’s pushing policies—including extending the Bush tax cuts and giving even deeper tax cuts to the wealthy—that could explode the deficit by as much as $5 trillion.
Rove is working hard and spending a lot of money to distort reality. But he cannot hide the fact that the President is delivering on his promises, nor the simple fact that Romney would return to the failed policies that caused the economic crisis and weakened the middle class.
Watch Obama for America Deputy Campaign Manager Stephanie Cutter dismantle the ad here.