Obama's New Bain Ad

[ClydeR]

The Obama campaign has a new ad critical of Romney's private sector record of buying companies, withdrawing money by piling on debt, underfunding the employee pension plans, and then bankrupting the company, leaving the workers with no job and no retirement.

http://www.youtube.com/watch?v=sWiSFwZJXwE

It's what Rick Perry bluntly called "vulture capitalism" just a few months ago.

[Tgo01]

The Obama campaign has a new ad critical of Romney's private sector record of buying companies, withdrawing money by piling on debt, underfunding the employee pension plans, and then bankrupting the company, leaving the workers with no job and no retirement.

So the only difference between Romney and Obama is Obama keeps paying the high cost pension plans?

[Parkbandit]

The Obama campaign has a new ad critical of Romney's private sector record of buying companies, withdrawing money by piling on debt, underfunding the employee pension plans, and then bankrupting the company, leaving the workers with no job and no retirement.

http://www.youtube.com/watch?v=sWiSFwZJXwE

It's what Rick Perry bluntly called "vulture capitalism" just a few months ago.

The funny and ironic part of that video is that they attribute the closing of GST Steel to Mitt Romney.. but Romney had left Bain Capital in February 1999. GST Steel was shut down in 2001.. when Bain was under the leadership of Jonathan Lavine... oh, he's a current campaign bundler for Obama.

[Parkbandit]

This is a far more effective ad:

http://www.youtube.com/watch?feature=player_embedded&v=VgIswmKt8wo

Romney should run this and Obama saying that if he doesn't fix the economy, he should be a 1 term President over and over and over again.

[Wrathbringer]

So the only difference between Romney and Obama is Obama keeps paying the high cost pension plans?

Beat me to it.

[Keller]

The funny and ironic part of that video is that they attribute the closing of GST Steel to Mitt Romney.. but Romney had left Bain Capital in February 1999. GST Steel was shut down in 2001.. when Bain was under the leadership of Jonathan Lavine... oh, he's a current campaign bundler for Obama.

Mitt Romney's business partners don't even like him?

[Suppa Hobbit Mage]

Obama is trying to paint Romney's work in the private sector at Bain Capital as the basis for his fiscal policies were he the President. I personally don't think you can compare them entirely apples to apples, but Obama isn't playing to me or people like me.

You look back at this one steel company, and compare it to the other similarly positioned steel companies in that industry at that time, and the industry was upside down. Go find how many other steel companies went bankrupt or closed around 1998-2002. Bain didn’t have government billions to bail out the company. That Bain bought it for I think 4M, turned a 12M profit and then it closed, is how a capitalistic society works. Are we to begrudge Bain for being a successful company? Nothing illegal or unethical has been reported, right?

That is the major philosophical difference between Obama and Romney. Compare what Bain Capital (attributed to Romney apparently) did for that steel company, and what Obama did for Solyndra. I haven’t done the math, but I believe the investment to lost job ratio is significantly higher for Solyndra.

Obama cannot stand on his tenure as President for any fiscal policy, so he’s attacking Romney for his work at a for profit company… seems like smoke and mirrors to me.

[ClydeR]

The funny and ironic part of that video is that they attribute the closing of GST Steel to Mitt Romney.. but Romney had left Bain Capital in February 1999. GST Steel was shut down in 2001.. when Bain was under the leadership of Jonathan Lavine... oh, he's a current campaign bundler for Obama.

Here's a real head scratcher. What PB said is both 100% true and a half truth. Don't engage in half truths, PB.

Romney was personally involved with this company from 1993 onward. The company was in terrible trouble when Romney left Bain, mainly because of all the debt that Bain put on it so that they could extract cash. Lavine was just saddled with cleaning it up.

You probably recall that Romney's primary criticism of the auto rescue is that it maintained the employees' pensions. Romney thought -- or so he said during the heat of the primary -- that the pensions of union employees should have been wiped out, which seems like an odd argument for a candidate to make.

[ClydeR]

That Bain bought it for I think 4M, turned a 12M profit and then it closed, is how a capitalistic society works. Are we to begrudge Bain for being a successful company?

You mean Bain wasn't all about creating jobs? Because that's what I keep hearing Romney say.

[Keller]

That Bain bought it for I think 4M, turned a 12M profit and then it closed, is how a capitalistic society works. Are we to begrudge Bain for being a successful company? Nothing illegal or unethical has been reported, right?

I don't know how this deal was structured, but based on the type of deals that were happening in the 90s, I'd give you good odds that this was a typical leveraged buyout, in which the private equity firm purchased the company with proceeds of borrowing of the company and not of the PE firm, and then borrowed more money to distribute to the PE firm.

So, in this case, to the extent that Bain made any money, it's because they sucked every last penny of equity out of the company before it declared bankruptcy - leaving creditors holding empty promises and factory workers on the unemployment line.

All that being said - the reason lenders continue to lend to PE firms is that they are more often than not correct in picking companies to purchase. So there are more success stories than there are GST Steels. I am merely correcting the fiction that Bain Capital turned a profit. They swindled money from creditors.

[Suppa Hobbit Mage]

You mean Bain wasn't all about creating jobs? Because that's what I keep hearing Romney say.

I'd suggest that Bain did create jobs, they just didn't create/maintain them in failing industries.

[Ryvicke]

I'd suggest that Bain did create jobs, they just didn't create/maintain them in failing industries.

Romney actually took companies that were performing excellently and drove them into the ground. Quite a few examples from the people that lost their jobs here:

http://www.seattleweekly.com/2012-04-18/news/mitt-romney-american-parasite/

[Parkbandit]

Here's a real head scratcher. What PB said is both 100% true and a half truth. Don't engage in half truths, PB.

Romney was personally involved with this company from 1993 onward. The company was in terrible trouble when Romney left Bain, mainly because of all the debt that Bain put on it so that they could extract cash. Lavine was just saddled with cleaning it up.

You probably recall that Romney's primary criticism of the auto rescue is that it maintained the employees' pensions. Romney thought -- or so he said during the heat of the primary -- that the pensions of union employees should have been wiped out, which seems like an odd argument for a candidate to make.

Do you even know or understand what Bain Capital is? It's a venture capital company. Do you know how that works?

I'll dumb it down for you as much as I can:

Company is in trouble... they contact venture capital company and ask to borrow some capital (money) to do X, Y and Z and that they will give back the venture capital company their money back in X number of years plus the interest/stake/reward for the loan.

If the business is successful in executing their plan, they pay the venture company back their money, give them whatever reward they agreed to at the beginning and the transaction is complete. If the business is unsuccessful in their plan, then the venture capital company determines what is the best way for them to get back as much of their investment as possible.

To believe this is Bain's "fault" and not GST Steel's requires a complete suspension of facts and logic.... sounds a lot like "Hope and Change" or "Forward"...

[Tgo01]

Honestly I think we should give Obama's jobs plan a try for another 4 years. Just wait until people give up finding a job and leave the workforce and watch as the unemployment rate drops.

[Parkbandit]

You mean Bain wasn't all about creating jobs? Because that's what I keep hearing Romney say.

You've heard it wrong.

Bain isn't in business TO create jobs. Bain is in business to make money.. just like all other for profit businesses. Creating jobs is just a benefit from making money.

[Parkbandit]

Honestly I think we should give Obama's jobs plan a try for another 4 years. Just wait until people give up finding a job and leave the workforce and watch as the unemployment rate drops.

Hey now.. his defenders here believe it's working. DON'T BREAK THEIR FANTASY!!!

PS -You clearly are a racist.

[Keller]

Do you even know or understand what Bain Capital is? It's a venture capital company. Do you know how that works?

I'll dumb it down for you as much as I can:

Company is in trouble... they contact venture capital company and ask to borrow some capital (money) to do X, Y and Z and that they will give back the venture capital company their money back in X number of years plus the interest/stake/reward for the loan.

If the business is successful in executing their plan, they pay the venture company back their money, give them whatever reward they agreed to at the beginning and the transaction is complete. If the business is unsuccessful in their plan, then the venture capital company determines what is the best way for them to get back as much of their investment as possible.

To believe this is Bain's "fault" and not GST Steel's requires a complete suspension of facts and logic.... sounds a lot like "Hope and Change" or "Forward"...

Yikes.

You definitely dumbed it down, but not necessarily in a good way.

[Suppa Hobbit Mage]

I am merely correcting the fiction that Bain Capital turned a profit. They swindled money from creditors.

Did Bain Cap do something illegal? Swindling money sounds illegal.

Would putting a half billion dollars of public money into a company that then goes bankrupt and then removing all the safeguards of getting that public money back be considered swindling money from the public?

In every successful business story there is going to be someone/something that lost. Google IMO beat Yahoo. AOL beat Microsoft then lost to everyone. BestBuy is losing to something and people are losing their jobs over it.

Are the people who are doing whatever it is they are doing to put their competitors out of business, villains? If it isn’t illegal, can we bash one man for wanting to be successful over another? Isn’t that the fundamental argument here?

Don’t get me wrong, I don’t think Bain is a great business model everyone should follow. I believe its part of a capitalistic society – we’ll always have wolves picking off the weak. Those companies (the wolves) also have risk and failures just like everyone else. If Bain had bought GST Steel and lost its ass and gone bankrupt and lost jobs, would be crying crocodile tears for Bain Capital?

I stand by my original statement that you can’t really compare what he did at Bain to what he would possibly do as President. They are two very different things.

[Parkbandit]

Yikes.

You definitely dumbed it down, but not necessarily in a good way.

I'm not interested in saving your extremely skewed narrative on the subject... just the facts.

[Keller]

Did Bain Cap do something illegal? Swindling money sounds illegal.

Would putting a half billion dollars of public money into a company that then goes bankrupt and then removing all the safeguards of getting that public money back be considered swindling money from the public?

In every successful business story there is going to be someone/something that lost. Google IMO beat Yahoo. AOL beat Microsoft then lost to everyone. BestBuy is losing to something and people are losing their jobs over it.

Are the people who are doing whatever it is they are doing to put their competitors out of business, villains? If it isn’t illegal, can we bash one man for wanting to be successful over another? Isn’t that the fundamental argument here?

Don’t get me wrong, I don’t think Bain is a great business model everyone should follow. I believe its part of a capitalistic society – we’ll always have wolves picking off the weak. Those companies (the wolves) also have risk and failures just like everyone else. If Bain had bought GST Steel and lost its ass and gone bankrupt and lost jobs, would be crying crocodile tears for Bain Capital?

I stand by my original statement that you can’t really compare what he did at Bain to what he would possibly do as President. They are two very different things.

It is not illegal. But the legality of the structure does not change the fact that the money distributed to Bain was cash from borrowing done by GST Steel, which was never repaid in full to GST Steel's creditors. It was not profit from some stellar management job Bain did.

Also, Bain couldn't have gone bankrupt because they [likely] didn't put much capital at risk.

The way a leveraged buyout works, assuming a $4m purchase price, is that Bain puts up $1m, GST Steel borrows $3m, and Bain/GST transfer $4m to the prior owners of GST Steel. Then GST, based on its relatively low debtload and it's new savvy ownership, borrows even more money and distributes the cash to Bain Capital. The idea is that you push debt obligations to the limit of estimated cash flow so that GST is just barely breaking even. Bain is happy because it has a return on its investment, creditors are happy because their debt is being serviced, and the company, under new management, is able to keep up with the debtload. The hope is that eventually the company is doing so well (cash flow well in excess of debtload) that Bain executes an IPO and really cashes in on its investment.

In this case, however, GST wasn't able to meet the debt obligations that Bain saddled it with. Could it have continued operating under prior management? Maybe. But we'll never know. It was targeted by Bain as an undervalued company with low debtload. Bain did it's diligence and thought they could buy it, leverage it, and improve the company's performance to allow it to become profitable even with the increased debt. Bain was wrong and it cost people their jobs.

[Keller]

I'm not interested in saving your extremely skewed narrative on the subject... just the facts.

If I was spouting off at the mouth about cooling systems and attic insulation, I'd hope you'd tell me if I was wrong.

And, if you did, I wouldn't become a prissy bitch about it.

These are just basic differences between you and me.

[Parkbandit]

If I was spouting off at the mouth about cooling systems and attic insulation, I'd hope you'd tell me if I was wrong.

And, if you did, I wouldn't become a prissy bitch about it.

These are just basic differences between you and me.

:rofl:

[Ryvicke]

Do you even know or understand what Bain Capital is? It's a venture capital company. Do you know how that works?

I'll dumb it down for you as much as I can:

Company is in trouble... they contact venture capital company and ask to borrow some capital (money) to do X, Y and Z and that they will give back the venture capital company their money back in X number of years plus the interest/stake/reward for the loan.

If the business is successful in executing their plan, they pay the venture company back their money, give them whatever reward they agreed to at the beginning and the transaction is complete. If the business is unsuccessful in their plan, then the venture capital company determines what is the best way for them to get back as much of their investment as possible.

To believe this is Bain's "fault" and not GST Steel's requires a complete suspension of facts and logic.... sounds a lot like "Hope and Change" or "Forward"...

lol--it is so darn cute that you think this is how private equity and venture capital works.

I worked my first two years in nyc in private equity and I can assure you, no company was excited at the prospect of my company's involvement in any way. If you think Bain Capital made "loans" and then only supplanted management structures if those loans went unpaid you quite simply have no understanding of how this model works.

[ClydeR]

I'll dumb it down for you as much as I can:

Thank you. That's always helpful.


Company is in trouble... they contact venture capital company and ask to borrow some capital (money) to do X, Y and Z and that they will give back the venture capital company their money back in X number of years plus the interest/stake/reward for the loan.

That's another half truth. On a few occasions, Bain invested in troubled companies, but mostly it engaged in buyouts of viable companies.

The steel company was viable. Poor fiscal management by Bain, which was under Romney's leadership at the time, changed it from a viable company into a troubled company and finally into a bankrupt company.

Unlike many of Bain's investments, Bain was a majority owner of the steel company.