Links to date: What did Romney do at Bain?


Did those pensions get looted: Yesterday, the New York Times tried to explain what firms like Bain Capital do.

Let’s ignore the fumbling effort of the silly-bills, Barbaro/Parker. Do you understand this capsule account by Lattman and Lowrey?
LATTMAN/LOWREY (1/11/12): Economists differ on the effectiveness and impact of private equity firms, which often borrow large amounts of debt to buy companies before selling them, hopefully for a profit. Despite the critics and the defenses mounted by the industry, the research is a little less than clear, partly because much of what these companies do is private and not subject to full disclosure.
Firms like Bain “borrow large amounts of debt to buy companies before selling them, hopefully for a profit.” Just a guess:

99 percent of New York Times readers couldn’t explain the puzzling phrase, “borrow large amounts of debt.” (Explain: How does that practice differ from borrowing large amounts of money?) At such junctures, readers often stop reading—or they stop comprehending, whether they realize or not. And of course, the notion that private equity firms “buy companies before selling them, hopefully for a profit”—Well sir, just on its face, it’s hard to get mad about that!

For Dean Baker’s review of this mumble-mouthed effort, click here. But if you want to read more about Bain Capital’s alleged conduct, we’ll again suggest that you read the detailed “special report” Reuters produced last week.

We’re talking here about Romney’s conduct as a business person. In fairness, you could imagine a person who behaved very badly in some career, then ran for office with good proposals. But at this point, the rubber has hit the road concerning Romney’s basic values. And this doesn’t turn on a silly analysis of a trivial turn of phrase as Romney makes a “reasonable point.”

Did Romney loot the pension funds of average working people? Did he walk off with giant profits as average workers were stripped of their retirement benefits? Liberals and progressives should insist that our intellectual leaders get clear on this question. Here at THE HOWLER, we’ll be monitoring the efforts of major news orgs to examine this matter. If we’re serious people at all, it’s time to drop the silly shit and go where rubber met road.

We think that Reuters piece was very clearly written. We were less impressed with Amy Goodman’s subsequent effort, which you can access here. Goodman spoke with Andy Sullivan, one of the Reuters reporters. For our money, she was somewhat unclear about the alleged misconduct here. (Your results may differ.)

The allegations here are grim. Liberals and progressives should insist on a clear statement of the charges and a clear review of the facts.

Just a guess: Major news orgs will look for ways to avoid these unpleasant tasks. Our suggestion: Fiery liberals like Rachel Maddow should stop all the stupid clowning around and name-call such foot-dragging news orgs by name. She should insist that they deal with this case. She should call their famous names. Right there on the air!

We’ll tell you right now, though—she won’t. This darling, willful, needy child is a serious player. Liberals should stop rewarding her stupid jokes and insist that she finally produce.

Update: For Kevin Drum's treatment, click this. Meanwhile:

To see the Washington Post piddle around exploring the question of "how many jobs were created and lost," just click here. This is the safer story. Absent pressure from alleged progressives, it will be used as a beard.


  1. what bain capital did/does is called a "Leveraged Buyout" (LBO). not a new or unique concept, it's been very popular since at least the mid 80's.

    here's how it works (simplified version):

    bain identifies a potential target company, usually one that has lots of tangible assets, with a high FMV, but isn't doing well at whatever their business actually is. bain buys a controlling interest in the company, using mostly borrowed money. this debt becomes the company's debt, not bain's, but bain controls the company.

    bain starts laying off workers, reducing costs. it sells off assets at FMV, using receipts to pay off the debt first. it sells off as many assets as possible, loots the pension fund, and finally fires whatever employees are left. in the interim, it uses the receipts to pay off debt as it has to, but the rest goes to bain as dividends, repayment of capital and capital gains. when the company is nothing more than a shell, it declares bankruptcy, and pretty much anyone still owed money is screwed.

    it's not illegal, it's been going on for decades, romney and his bain buds didn't create it, they simply availed themselves of it, as have so many others before them.

    the argument used to morally justify what's basically a piranah attack is that they act to convert assets not being used efficiently, to being used efficiently by other companies who they sell those assets to.

    there is some actual basis in fact to this argument, but that is small comfort to those who lose their jobs and pensions in the process. oh, those looted pension funds then most likely become the responsibility of the federal government. this means we, the taxpaying public, gets to fund them.

    1. Where is the reference? I know nothing of pension funds being looted, so I need a reference.

    2. This makes little sense and differs from the account of Dean Baker. Where is the reference?

  2. The expression loot the pension fund is not the issue here.
    Did Bain take money out of the deal and leave a hole in the pension fund?
    Did the taxpayer end up covering the shortage in the pension fund?
    Was either event illegal?
    I don't know.
    Was either unethical?
    I say both were.
    Should either event be outlawed?
    Yes, both.
    Should Democrats use this against Romney in a campaign?