The Romney Record at Bain: Bankruptcies, Bailouts, & Mass Layoffs
Mitt Romney’s pitch is that he’s a “businessman” who understands the “real economy,” in contrast to President Obama who Romney says “doesn’t understand how the economy works.” During a presidential debate in November, Romney reminded the audience of the source of his “real economy” experience: “I worked at one company, Bain, for 25 years.” That quote has now been replayed thousands of times in Romney television ads in Iowa, New Hampshire, and Florida and has been viewed more than 168,000 times on YouTube.
Here’s how the Los Angeles Times described Romney’s tenure as CEO of Bain Capital:
Romney and his team also maximized returns by firing workers, seeking government subsidies, and flipping companies quickly for large profits. Sometimes Bain investors gained even when companies slid into bankruptcy.
Romney himself became wealthy at Bain. He is now worth between $190 million and $250 million, much of it derived from his time running the investment firm, his campaign staffers have said.
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.”
Here’s the rundown on Mitt Romney’s devastating record as CEO of Bain Capital, a tenure marked by bankruptcies, bailouts, and mass layoffs — all while Romney and his partners raked in billions of dollars in profits for the firm and Romney himself amassed a quarter-billion dollar fortune.
Romney’s Bain Capital Caused Mass Layoffs, Sent Jobs Overseas
Thousands of Americans were laid off by Bain Capital at companies it purchased, managed, and, at least a quarter of the time, drove into bankruptcy. Here’s an infographic from Americans United for Change laying out some of the carnage:
In addition to jobs lost at companies that Romney and Bain drove into bankruptcy, other jobs were sacrificed to maximize profits or simply sent overseas.
A Bailout Caused by Bain Capital
ThinkProgress’ Travis Waldron explains how one Romney target had to be bailed out by a federal agency after it went bankrupt, even as Bain walked away with a handsome profit:
Romney, whose time as CEO of Bain Capital has been a centerpiece of his campaign, as he has criticized President Obama for not having experience in the “real economy,” opposed both the 2008 bank bailouts under President George W. Bush and Obama’s rescue of the auto industry. But when Kansas City’s Worldwide Grinding Systems went belly-up less than a decade after Bain became its majority stakeholder, the company, which had been in operation since 1888, had to turn to a federal insurance agency to bailout its pension program in large part because Bain had “saddled” it with “such a heavy debt load”:
Less than a decade later, the mill was padlocked and some 750 people lost their jobs. Workers were denied the severance pay and health insurance they’d been promised, and their pension benefits were cut by as much as $400 (258 pounds) a month.
What’s more, a federal government insurance agency had to pony up $44 million to bail out the company’s underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees.
Romney’s Bain Capital Made Billions While Bankrupting Nearly One-Quarter Of The Companies It Invested In
According to the Wall Street Journal, Romney and company drove nearly a quarter of the firms they bought into bankruptcy, but that didn’t stop them from raking in billions of dollars in profits at the same time:
The Wall Street Journal, aiming for a comprehensive assessment, examined 77 businesses Bain invested in while Mr. Romney led the firm from its 1984 start until early 1999, to see how they fared during Bain’s involvement and shortly afterward.
Among the findings: 22% either filed for bankruptcy reorganization or closed their doors by the end of the eighth year after Bain first invested, sometimes with substantial job losses. An additional 8% ran into so much trouble that all of the money Bain invested was lost. […]
The Journal analysis shows that in total, Bain produced about $2.5 billion in gains for its investors in the 77 deals, on about $1.1 billion invested. Overall, Bain recorded roughly 50% to 80% annual gains in this period, which experts said was among the best track records for buyout firms in that era.[…]
Mr. Mehran, a researcher at the Federal Reserve Bank of New York, said the rate at which Bain’s target companies ran into trouble at some stage “seems large.”
Conservatives Attack Romney For “Looting” Companies, Firing Workers
It’s not just those who were laid off by Romney’s Bain and progressives who are now calling attention to his record at Bain Capital. In recent days, some of his 2012 rivals have stepped into the fray. ThinkProgress’ Scott Keyes has a roundup of the latest attacks from right:
JON HUNTSMAN: “What’s clear is he likes firing people, I like creating jobs.” [1/9/12]
NEWT GINGRICH: “Those of us who believe in free markets and those of us who believe that, in fact, the whole goals of investment is entrepreneurship and job creation, would find it pretty hard to justify rich people figuring out clever, legal ways to loot out a company.” [1/8/12]
RICK PERRY: “Now, I have no doubt Mitt Romney was worried about pink slips — whether he was going to have enough of them to hand out because his company, Bain Capital, of all the jobs that they killed. I’m sure he was worried that he would run out of pink slips.” [1/9/12]
GINGRICH: Bain Capital was a “small group of rich people manipulating the lives of thousands of people, and taking all the money.” [1/9/12]
PRO-GINGRICH SUPER PAC: “A story of greed, playing the system for a quick buck. A group of corporate raiders led by Mitt Romney, more ruthless than Wall Street. For tens of thousands of Americans, the suffering began when Mitt Romney came to town.” [1/9/12]
GINGRICH: “I would just say that if Gov. Romney would like to give back all of the money he’s earned from bankrupting companies and laying off employees over his years at Bain, that I would be glad to listen to him.” [12/12/11]
A Golden Parachute for Mitt Romney
As the New York Times reported in December, Romney may have left Bain Capital more than a decade ago but he still enjoys millions of dollars a year in profits from the firm:
In what would be the final deal of his private equity career, he negotiated a retirement agreement with his former partners that has paid him a share of Bain’s profits ever since, bringing the Romney family millions of dollars in income each year and bolstering the fortune that has helped finance Mr. Romney’s political aspirations.
The arrangement allowed Mr. Romney to pursue his career in public life while enjoying much of the financial upside of being a Bain partner as the company grew into a global investing behemoth.
And because of an unfair tax loophole that Romney both supports and personally takes advantage of, he only pays a maximum tax rate of 15 percent — a far lower rate than many middle class workers. Since Romney still refuses to release his tax returns, we can’t say for sure just how low a rate he pays only that it is certainly lower than that paid by tens of millions of middle class Americans.
IN TWO SENTENCES: Mitt Romney has an economic agenda of, by, and for the wealthiest 1 Percent of Americans at the expense of the other 99 Percent. He may claim to be a job creator, but Romney’s record at Bain Capital shows that he personally made hundreds of millions of dollars by bankrupting companies and laying off thousands of Americans.
Evening Brief: Important Stories That You May Have Missed
Mitt Romney today in New Hampshire: “I like being able to fire people who provide me with services.”
America tossed a children’s humanitarian aid worker in Gitmo for seven years.
Former GOP Rep. Joe Scarborough says GOP has the “weakest presidential field they’ve seen in modern history.”
How college football bowl games earn millions in profits but pay almost nothing in taxes.
Six reasons progressives should care about agriculture policy.
Doctors call for a natural gas fracking moratorium.
Jon Huntsman rapped Mitt Romney for suggesting that a president should defer to his generals in making decisions about war and peace, saying that he would listen to the generals’ “input” but make his “own decision.”
A pro-Gingrich “super PAC” is launching a $3.4 million ad campaign portraying Mitt Romney as a greedy corporate raider during his time at Bain Capital.
The White House is denying an Iranian court’s verdict that Amir Mirza Hekmati, an Iranian-American dual citizen, was spying for the CIA and engaged in espionage.