Disconnect on Bain

A 2000 prospectus for potential investors able to invest a minimum of $1 million in Bain Capital touts the firm’s success over the 15 years (1984 – 1999) former Massachusetts Gov. Mitt Romney led the company, delivering estimated annual returns more than five times the Dow Jones Industrial Average over the same period. As the Los Angeles Times reported in June 2011, the prospectus also notes that during the time Romney led the firm, it acquired more than 115 companies, developing a reputation as a top leveraged buyout firm. The strategic decision to use leveraged buyouts meant that risk to the investor and the firm was minimized while they were still able to profit despite debt and losses to the acquired company. 

A majority of American voters — approximately 99 percent — aren’t looking to invest a million dollars, however. Which is why it’s more than fair to ask how Romney was so successful in delivering strong returns on investments for his firm and its clients, and at what cost those profits were delivered. Despite the GOP talking points, that discussion has nothing to do with the merits of a free enterprise market system or private-equity financing. Nor is it an attack on financially successful people or the business community. After all, Romney himself put forward his leadership at Bain Capital as an example of his economic leadership, job creation and business capabilities. It was former GOP presidential contenders Newt Gingrich and Texas Gov. Rick Perry who referred to it as “vulture capitalism.” And it was former Bain managing partner Marc B. Wolpow who was quoted as saying, “I never thought of what I do for a living as job creation,” and “the primary goal of private equity is to create wealth for your investors.”

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As Romney and his campaign team like to say, sometimes businesses succeed and sometimes they don’t. That sounds a lot like comments made by JPMorgan Chase CEO Jamie Dimon downplaying a $2 billion loss — due again to an overly risky hedging strategy — because the company is “still going to earn a lot of money this quarter so it isn’t like the company is jeopardized.” Those are fair, legitimate arguments to make: both Dimon and Romney’s investors still made money when things didn’t work out. However, both sentiments demonstrate their inability to recognize that to most Americans, such comfort with loss and failure sounds just like what people playing by a completely different set of rules would say to cover their mistakes. 

Team Obama recently launched a website, 
romneyeconomics.com, featuring the stories of people in nine states — representing 115 electoral votes — who didn’t have the luxury of dismissing financial losses when things didn’t work out under Romney’s leadership. Poignantly, each person conveys a sense of helplessness all too familiar to the many Americans who didn’t have large cash reserves, tax loopholes or offshore accounts to save them when the economy crashed in 2008.

Obviously the full picture of Romney’s time in the business world is more complicated than his campaign would have us believe. Add to that an abysmal record in Massachusetts, which saw a 6.5 percent increase in state spending and a $1 billion deficit, and it starts to become clear why Romney’s outside allies felt nervous enough about both his record and strength as a candidate to consider the disgusting tactics outlined in a recently leaked strategy memo prepared by Fred Davis re-hashing the Rev. Jeremiah Wright controversy from the 2008 campaign.

Karen Finney is a political analyst for MSNBC and Democratic consultant, and co-host of POTUS/Sirius XM’s “The Flaks.”