The Bane of Bain

[Winstonm]

From Boston Globe:

 

 

Government documents filed by Mitt Romney and Bain Capital say Romney remained chief executive and chairman of the firm three years beyond the date he said he ceded control, even creating five new investment partnerships during that time.

 

 

Romney has said he left Bain in 1999 to lead the winter Olympics in Salt Lake City, ending his role in the company. But public Securities and Exchange Commission documents filed later by Bain Capital state he remained the firm’s “sole stockholder, chairman of the board, chief executive officer, and president.”

 

 

Also, a Massachusetts financial disclosure form Romney filed in 2003 states that he still owned 100 percent of Bain Capital in 2002. And Romney’s state financial disclosure forms indicate he earned at least $100,000 as a Bain “executive” in 2001 and 2002, separate from investment earnings.

[billw55]

Sounds like three more years experience running a successful business.

[ggwhiz]

Such a busy life. It's easy to misplace something like those shares in the desk drawer.

 

On a side note, I'm Canadian but fascinated by the American process. Up here, an election is called and (not counting a little bit of pre-positioning) start to finish it's over in 6 weeks.

 

Yours, right down to State reps are like the movie I watched last night. Goes on forever, the tension builds and the ending often sucks.

[luke warm]

so what? even the folks at bain (some of them big in the democratic party) backed romney on this one.. in my view, romney should just tell the truth about it "i was on leave of absence from 1999 - 2002, when i retired from bain... i had nothing to do with the running of bain from the time i headed the olympics until i retired"

 

from the washington post

The Obama campaign moved quickly to define what the article said, claiming that this transfer of jobs took place while Romney ran Bain. That’s not what the original article said.

 

Yet the campaign clearly seized on this report because their interpretation fit with a long-term “outsourcing” attack they have waged against Romney. One of their outsourcing ads before the article ran, in fact, earned Four Pinocchios. These new ads would not fare much better; there is little in the Post article that backs up the Obama campaign’s spin.

 

(Our colleagues at FactCheck.org have also offered their own analysis of the Obama outsourcing ads and the issues raised in The Post’s article, saying “some of the claims in the ads are untrue, and others are thinly supported.” The Obama campaign did not dispute the details of their analysis, except to once again claim that Romney had an active role in Bain after he left to run the Salt Lake City Olympics in 1999--a claim that FactCheck.org quickly debunked. We came to the same conclusion in January. There is no evidence that Romney played a role in Bain decisions after he left to run the Olympics.)

 

from factck.org

But after reviewing numerous corporate filings with the Securities and Exchange

Commission, contemporary news accounts, company histories and press releases, and the

evidence offered by both the Obama and Romney campaigns, we found no evidence to support the claim that Romney — while he was still running Bain Capital — shipped American jobs overseas.

[Winstonm]

What Romeny said may not technically be a lie; however, documents turned in to the SEC show Romney was CEO of Bain from 1999-2002, meaning he was responsible for all decisions made by that company during that time.

 

To say he "left Bain in 1999 and had no part in the decision making" may be accurate, but it is a disingenous statement that gives the impression that Romney could not be held responsible for what occured at Bain from 1999-2002, which is clearly not accurate.

 

Regardless of day-to-day decision making, it was clearly Romney as CEO and sole shareholder who would have made the decision as to who would make day-to-day decisions, so Romney as CEO would be responsible for the decisions made from 1999-2002, even if he ceded his decision-making duties.

 

The idea of a leader being responsibile for the actions of others is the reason Charles Manson is serving a life sentence in San Quentin. The CEO of Ford was not concerned with the day-to-day decisions of what gas tank and what electrical system to use in the Pinto, but rest assured he was held responsible for the decisions and the consequences of those decisions.

[luke warm]

What Romeny said may not technically be a lie

at the risk of repeating myself, i'll repeat myself

 

But after reviewing numerous corporate filings with the Securities and Exchange

Commission, contemporary news accounts, company histories and press releases, and the

evidence offered by both the Obama and Romney campaigns, we found no evidence to support the claim that Romney — while he was still running Bain Capital — shipped American jobs overseas.

[phil_20686]

If off-shoring is so evil why are you not rushing to close down all those Toyota factories in america....

 

Off shoring is generally a good thing. Attempts to prevent it normally just result in wasting lots of money. Preventing offshoring always means spending more money, sometimes you can do that in reasonably productive ways, like building better infrastructure, but in most developed economies most low haning fruit is gone. If you choose to keep them through a tax break, it just means you are taxing some other industry more, and at the margin that will just drive some other jobs off shore.

 

Even supposing that you could prevent offshoring without losing money on it, via some hard to imagine regulatory scheme, it is almost certainly immoral to do so. Almost all of these jobs are going to countries that are much poorer than the G8, and which have a scarcity of jobs (thats why their labour is cheaper), so you are protecting your own welfare at the expense of poor people. Offshoring is the most effective foreign aid that there is. It transfers technology, capital, and skills into poor countries, in the hands of corporations that are large enough to pressure badly run countries into reforming their working practices and institutions.

 

So Yay for offshoring.

[Winstonm]

at the risk of repeating myself, i'll repeat myself

 

The issue is responsibility and truthfulness. From the Boston Globe (rearranged for clarity, emphasis added).

 

The timing of Romney’s departure from Bain is a key point of contention because he has said his resignation in February 1999 meant he was not responsible for Bain Capital companies that went bankrupt or laid off workers after that date.

 

Romney has said he left Bain in 1999 to lead the winter Olympics in Salt Lake City, ending his role in the company. But public Securities and Exchange Commission documents filed later by Bain Capital state he remained the firm’s “sole stockholder, chairman of the board, chief executive officer, and president.”

 

Also, a Massachusetts financial disclosure form Romney filed in 2003 states that he still owned 100 percent of Bain Capital in 2002. And Romney’s state financial disclosure forms indicate he earned at least $100,000 as a Bain “executive” in 2001 and 2002, separate from investment earnings.

 

Of course there would be no smoking gun of Romney sitting in a board meeting and making the decisions - but if he owned the company and was its CEO through 2002, he certainly didn't "leave it" as he has claimed, and he was indeed reponsible for layoffs and bankruptcies of Bain Capital companies.

[Winstonm]

If off-shoring is so evil why are you not rushing to close down all those Toyota factories in america....

 

Off shoring is generally a good thing. Attempts to prevent it normally just result in wasting lots of money. Preventing offshoring always means spending more money, sometimes you can do that in reasonably productive ways, like building better infrastructure, but in most developed economies most low haning fruit is gone. If you choose to keep them through a tax break, it just means you are taxing some other industry more, and at the margin that will just drive some other jobs off shore.

 

Even supposing that you could prevent offshoring without losing money on it, via some hard to imagine regulatory scheme, it is almost certainly immoral to do so. Almost all of these jobs are going to countries that are much poorer than the G8, and which have a scarcity of jobs (thats why their labour is cheaper), so you are protecting your own welfare at the expense of poor people. Offshoring is the most effective foreign aid that there is. It transfers technology, capital, and skills into poor countries, in the hands of corporations that are large enough to pressure badly run countries into reforming their working practices and institutions.

 

So Yay for offshoring.

 

Offshoring is irrelevant. Romeny wants to claim he cannot be held responsible for actions taken by the company he owned and was CEO of simply because he was not physically present.

 

That is a disingenuous argument that treads a narrow line between literal truth and deception.

[phil_20686]

Offshoring is irrelevant. Romeny wants to claim he cannot be held responsible for actions taken by the company he owned and was CEO of simply because he was not physically present.

 

That is a disingenuous argument that treads a narrow line between literal truth and deception.

 

Yes, but you generally wouldn't try to avoid responsibility for something that people thought was a good idea. Clearly the discourse is that offshoring is bad, else why the fuss?

[mike777]

My two cents worth

 

I think the only point to come out of this whole mess is that the President knows how to run a political campaign better than Romney.

 

Bain is a huge part of Romney's life, after years of running for political office you would think his team would know how to spin Bain as a good thing.

 

OTOH perhaps it is just impossible for a long time businessman to run for President of the USA and win.

 

Unemployment over 8%, 15 trillion and counting in deficits, people losingjobs and their homes left and right

and Romney spends all his time defending whether he is a huge liar and a felon with secret overseas bank accounts.

 

 

I mean if Romney is a dirty, uncaring, rich guy who may be a felon or liar at best...

[Phil]

If I were on Mitt's campaign, I would let this fish run a long time. It really distracts from some other issues - if there are any. It could be like ACA was for Obama - it took the publics mind off the May and June jobs report.

 

Agree with the younger Phil about making a company more profitable by trimming costs. There's nothing un-American about capitalism, even if some workers get displaced.

 

I told Mark L. this morning that someone that has some insight into why companies move factories overseas might actually be able to help craft some policies that incentivize companies that are looking to export jobs. Of course a Community Organizer didn't have much to do with any corporate structuring, so this is an easy rock to throw at Mitt.

 

On the other hand, if this is the best skeleton-in-the-closet the left strategists came come up with then he is truly a boy scout.

 

But I'm kind of waiting for a few shoes to drop over the next month. Silly Season should be a fun one.

[Vampyr]

Have the Republicans really screwed this one up, or do they think Obama is unassailable so they might as well not bother finding someone who has a chance?

[Bbradley62]

Have the Republicans really screwed this one up, or do they think Obama is unassailable so they might as well not bother finding someone who has a chance?

It appears to me that Republican primary voters made a pragmatic choice, since Romney was the only major GOP candidate (with the possible exception of Ron Paul) who had a reasonable chance of winning swing voters. Bachman, Cain, Perry and Santorum could only play to the base, votes the GOP would always win in the general election anyway. (read: Romney is the least scary of the candidates listed.)

[Vampyr]

It appears to me that Republican primary voters made a pragmatic choice,

 

Sure, but perhaps the party leaders could have found someone better to run in the primaries. I am pretty sure that exporting jobs is going to be a deal-breaker for an awful lot of voters.

[mike777]

Sure, but perhaps the party leaders could have found someone better to run in the primaries. I am pretty sure that exporting jobs is going to be a deal-breaker for an awful lot of voters.

 

 

My bet most wont change votes on this issue. The President's administration has given numerous tax breaks and grants to companies that outsource jobs. Granted you may not know this.

 

I think a bigger issue is does Mr. Romney and his team have the political chops.

 

--

 

 

sidenote it comes across very rude to call him Obama...he is the President of USA and please at least respect the office.

[Vampyr]

sidenote it comes across very rude to call him Obama...he is the President of USA and please at least respect the office.

 

Thanks, I will keep that in mind if I ever meet him :)

[Bbradley62]

Have the Republicans really screwed this one up, or do they think Obama is unassailable so they might as well not bother finding someone who has a chance?

I think most of the younger generation chose to wait until 2016 when, assuming Prez O is reelected, there will be two wide-open primaries with no incumbents running, like in 2008. No one wants to go into that race as "the 2012 loser".

[mike777]

I think most of the younger generation chose to wait until 2016 when, assuming Prez O is reelected, there will be two wide-open primaries with no incumbents running, like in 2008. No one wants to go into that race as "the 2012 loser".

 

 

 

Good point, that means the middle of November 2012 the race for 2016 will really heat up with so many choices.

[Cthulhu D]

Sure, but perhaps the party leaders could have found someone better to run in the primaries. I am pretty sure that exporting jobs is going to be a deal-breaker for an awful lot of voters.

 

Romney is, amusingly, a white Obama from a policy perspective (assuming that his background prior to running for president is what he actually thinks rather than whatever he is saying to get elected).

 

However, the reason Obama is hitting Romney hard about the Bain capital thing is that there is something bad in there. I reckon it's one of these four:

 

1. Extremely high income.

2. More overseas bank accounts and tax shields than previously indicated. Offshore shell companies?

3. Controversial investments. That Bain invested in aborted foetus disposal systems is already public knowledge. What else is there?

4. A very low tax rate.

 

Your pick as to what. I don't think any of them will end particularly well.

[Vampyr]

I think most of the younger generation chose to wait until 2016 when, assuming Prez O is reelected, there will be two wide-open primaries with no incumbents running, like in 2008. No one wants to go into that race as "the 2012 loser".

 

Perhaps Romney was willing to be the sacrificial lamb, hoping to clear the way for a Mormon candidate (with a realistic chance of being elected) in the future.

[luke warm]

The issue is responsibility and truthfulness.

i agree... so does the washington post, which said

 

One of their outsourcing ads before the article ran, in fact, earned Four Pinocchios. These new ads would not fare much better; there is little in the Post article that backs up the Obama campaign’s spin.

and so does fact check, which said

 

we found no evidence to support the claim that Romney — while he was still running Bain Capital — shipped American jobs overseas.

[hrothgar]

Romney's run at the presidency is predicated on the claim that he is in a better position to add jobs and improve the economy than Obama.

His only real supporting evidence is his experience at Bain. (Romney certainly can't run on his jobs record as governor of Massachusetts)

It's not at all surprising that the Obama campaign is attacking Romney on this claim.

 

Romney had a great track record at Bain. He was highly successful at creating shareholder value which is the primary concern of an investment manager. However, this is in no way equivalent to "creating jobs". Indeed, the strategies that made Bain successful are better characterized as "looting the pension fund" than "job creation".

 

I am attaching a link from well know liberal bastion "Bloomberg" which describes Bain method's of generating shareholder value along with a key quote:

http://www.bloomberg.com/news/2012-07-15/romney-s-bain-yielded-private-gains-socialized-losses.html

 

Bain Capital’s acquisition in 1994 of Dade International, a supplier of in-vitro diagnostic products, was 81 percent financed by debt. Of the $85 million in equity, about $27 million came from Bain with the rest coming from a group of investors that included Goldman Sachs Group Inc.

 

From 1995 to 1999, Bain Capital tripled Dade’s debt from about $300 million to $902 million.

 

Some of the debt was used to pay for acquisitions of DuPont Co.’s in-vitro diagnostics division in May 1996 and Behring Diagnostics, a German medical- testing company, in 1997. But some was used to finance a repurchase of half of Bain Capital’s equity for $242 million -- more than eight times its investment -- and to pay its investors almost $100 million in fees.

 

Dade was left in a weakened financial condition and couldn’t withstand the shocks of increased debt payments when interest rates rose and revenue from Europe fell because of a decline in the value of the euro. The company filed for bankruptcy in August 2002, because of its inability to service a $1.5 billion debt load. About 1,700 people lost their jobs while Bain Capital claimed capital gains (net of its losses in the bankruptcy) of roughly $216 million, an eightfold return.

 

Personally, I don't think that the Obama campaign should be pushing outsourcing as hard as they are. (I think tax scam / raiding the pension fund is much more damning). With this said and done, for the purposes of a general election focusing on stewardship of the economy at large I do think that it is right and proper to hang Bain Capital like a millstone around Romney's neck. By the time November rolls around, I'm hoping that Bain Capital is radioactive.

[PassedOut]

Krugman: Romney’s personal finances matter

 

So how can the Obama campaign cut through this political and media fog? By talking about Romney’s personal history, and the way that history resonates with the realities of his pro-rich, anti-middle-class policy proposals.

 

Thus the entirely true charge that Romney wants to slash historically low tax rates on the rich even further dovetails perfectly with his own record of extraordinary tax avoidance — so extraordinary that he’s evidently afraid to let voters see his tax returns from before 2010. The equally true charge that he’s pushing policies that would benefit the rich at the expense of ordinary working Americans meshes with Bain’s record of earning big profits even when workers suffered — a record so stark that Romney is attempting to distance himself from part of it by insisting that he had nothing to do with Bain’s operations after 1999, even though the company continued to list him as CEO and sole owner until 2002. And so on.

 

The point is that talking about Romney’s personal history isn’t a diversion from substantive policy discussion. On the contrary, in a political and media environment strongly biased against substance, talking about Bain and offshore accounts is the only way to bring the real policy issues into focus. And we should applaud, not condemn, the Obama campaign for standing up to the tut-tutters.

It would be better if the news media discussed the issues in a meaningful way. But when we've got barbers who think that rockets punching holes in the ozone layer creates global warming, this is practical politics 101.

[luke warm]

Krugman: Romney’s personal finances matter

why do they matter? he's rich, what's the big deal?

 

Personally, I don't think that the Obama campaign should be pushing outsourcing as hard as they are.

you're right, especially given his own less than sterling stance on outsourcing, from his jobs czar to some stimulus spending... even so, i agree that if one is to run on certain facts, those facts become fair game... but that goes both ways... obama's record as prez is only marginally better than carter's was, which explains why he'd rather run against romney than for himself