More Romney Lies re: Bain: Under Romney, Bain Got FDIC Bailout & Then Defaulted, Screwing Taxpayers
"......MITT ROMNEY LIKES TO SAY HE WON'T "APOLOgize" for his success in business. But what he never says is "thank you" - to the American people - for the federal bailout of Bain & Company that made so much of his outsize wealth possible.
According to the candidate's mythology, Romney took leave of his duties at the private equity firm Bain Capital in 1990 and rode in on a white horse to lead a swift restructuring of Bain & Company, preventing the collapse of the consulting firm where his career began. When The Boston Globe reported on the rescue at the time of his Senate run against Ted Kennedy, campaign aides spun Romney as the wizard behind a "long-shot miracle," bragging that he had "saved bank depositors all over the country $30 million when he saved Bain & Company."
In fact, government documents on the bailout obtained by ROLLING STONE show that the legend crafted by Romney is basically a lie.
The federal records, obtained under the Freedom of Information Act, reveal that Romney's initial rescue attempt at Bain & Company was actually a disaster - leaving the firm so financially strapped that it had "no value as a going concern." Even worse, the federal bailout ultimately engineered by Romney screwed the FDIC - the bank insurance system backed by taxpayers -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.
With his selection of Paul Ryan as his running mate, Romney has made fiscal stewardship the centerpiece of his campaign. A banner at MittRomney.com declared WE HAVE A MORAL RESPONSIBILITY NOT TO SPEND MORE THAN WE TAKE IN. Romney also opposed the federal bailout for Detroit automakers, famously arguing that the industry should be forced into bankruptcy. Government bailouts, he insists, are "the wrong way to go."
But the FDIC documents on the Bain deal - which were heavily redacted by the firm prior to release - show that as a wealthy businessman, Romney was willing to go to extremes to secure a federal bailout to serve his own interests. He had a lot at stake, both financially and politically.
Had Bain & Company collapsed, insiders say, it would have dealt a grave setback to Bain Capital, where Romney went on to build a personal fortune valued at as much as $250 million. It would also have short-circuited his political career before it began, tagging Romney as a failed businessman unable to rescue his own firm.
"None of us wanted to see Bain be the laughingstock of the business world," recalls a longtime Romney lieutenant who asked not to be identified. "But Mitt's reputation was on the line."
THE TROUBLE BEGAN IN 1984, WHEN BAIN & C0M-pany spun off Bain Capital to engage in leveraged buyouts and put Romney in charge of the new operation. To free up money to invest in the new business, founder Bill Bain and his partners cashed out much of their stock in the consulting firm - leaving it saddled with about $200 million in debt. (Romney, though not a founder, reportedly profited from the deal.) "People will tell you that Bill raped the place clean, was greedy, didn't know when to stop," a former Bain consultant later conceded. "Did they take too much out of the firm? You bet."
The FDIC documents make clear what happened next: "Soon after the founders sold their equity," analysts reported, "business began to drop off." First came scandal: In the late 1980s, a Bain consultant became a key figure in an illegal stock manipulation scheme in London. The firm's reputation took a hit, and it fired 10 percent of its consulting force. By the time the 1989 recession began, Bain & Company found itself going broke fast. Cash flows weren't enough to service the debt imposed by the founders, and the firm could barely make payroll. In a panic, Bill Bain tapped Romney, his longtime protege, to take the reins.
In Romney's own retelling, he casts himself as a selfless and loyal company man. "There was no upside," he told his cheerleading biographer Hugh Hewitt in 2007- "There was no particular reason to do it other than a sense of obligation and duty to an organization that had done great things for me."
In fact, Romney had a direct stake in the survival of Bain & Company: He had been working to build the Bain brand his entire career, and felt he had to save the firm at all costs. After all, Bain sold top-dollar strategic advice to big businesses about how to protect themselves from going bust. If Bain & Company went bankrupt, recalls the Romney deputy, "anyone associated with them would have looked clownish." Indeed, when a banker from Goldman Sachs urged Bain to consider bankruptcy as the obvious solution to the firm's woes, Romney's desperation began to show. He flatly refused to discuss it - and in the ensuing argument, one witness says, Romney almost ended up in a brawl when the Goldman banker advised him to "go fuck yourself." For the sake of Romney's career and fortune, bankruptcy was simply not an option - no matter who got screwed in the process.
ACCORDING TO THE GOVERNMENT RECORDS OBtained by ROLLING STONE, Bain & Company "defaulted on its debt obligations" at nearly the same time that "W. Mitt Romney… stepped in as managing director (and later chief executive) in 1990 and led the financial restructuring intended to get the firm back on track."
Romney moved decisively, and his early efforts appeared promising. He persuaded the founders to return $25 million of the cash they had raided from Bain & Company and forgive $75 million in debt, in return for protection from most future liabilities. Romney then consolidated Bain's massive debts into a single, binding loan agreement with four banks, which received liens on Bain's assets and agreed to delay repayments on the firm's debts for two years. The federal government also signed off on the deal, since the FDIC had recently taken control of a bank that was owed $30.6 million by Bain. Romney assured creditors that the restructuring would enable Bain to "operate normally, compensate its professionals competitively" and, ultimately, pay off its debts.
Almost as soon as the FDIC agreed to the loan restructuring, however, Romney's rescue plan began to fall apart. "The company realized early on that it would be unable to hit its revenue targets or manage the debt structure," the documents reveal. By the spring of 1992, Bain's decline was perilous: "If Bain goes into default," one analyst warned the FDIC, "the bank group will need to decide whether to force Bain into bankruptcy."
Authorshttp://ICKINSON, TIM.
Source:Rolling Stone; 9/13/2012, Issue 1165, p52-53, 2p
= new reply since forum marked as read
