Mitt Romney: Shameless and shameful

Rolling Stone has a blockbuster piece online that will appear in the September 13 issue. In it, journalist Tim Dickinson reveals that, while at the helm of Bain Capital, Mitt Romney (a) nearly managed the firm into bankruptcy, (b) received a massive government bailout and then, (c) swindled taxpayers out of at least $10 million after basically blackmailing the FDIC.

It’s a piece of journalistic excellence that is likely to break this campaign wide open.

Mitt Romney likes to say he won’t “apologize” for his success in business. But what he never says is “thank you” – to the American people – for the federal bailout of Bain & Company that made so much of his outsize wealth possible. According to the candidate’s mythology, Romney took leave of his duties at the private equity firm Bain Capital in 1990 and rode in on a white horse to lead a swift restructuring of Bain & Company, preventing the collapse of the consulting firm where his career began… In fact, government documents on the bailout obtained by Rolling Stone show that the legend crafted by Romney is basically a lie. The federal records, obtained under the Freedom of Information Act, reveal that Romney’s initial rescue attempt at Bain & Company was actually a disaster – leaving the firm so financially strapped that it had “no value as a going concern.” Even worse, the federal bailout ultimately engineered by Romney screwed the FDIC – the bank insurance system backed by taxpayers – out of at least $10 million. And in an added insult, Romney rewarded top executives at Bain with hefty bonuses at the very moment that he was demanding his handout from the feds.

Basically Romney took the reins after the founders cashed out, leaving Bain Capital in debt. He consolidated the company’s debt and then arranged for a single loan from four different banks. Because one of the banks to which Bain owed over $30 million was under the control of the FDIC, the government had to sign off on the deal.

Things quickly went south and Romney knew they’d never make good on their loan. Although they had lots of cash, their position was still untenable. The kicker was that they had put a “poison pill” in their loan agreement which allowed Romney and his Bain partners to take bonuses instead of paying back the loan. According to the documents obtained by Dickinson, the banks put it this way: “The company can deplete its cash balances by making officer-bonus payments and still be in compliance with the loan documents.” The banks were forced to deal with Romney, however, because a Bain default would bankrupt them, too.

Romney negotiated a deal that allowed them to pay only 35% of what the loan was for. The banks said “no way” so Bain executives started paying themselves bonuses, basically blackmailing the banks and calling their bluff. The FDIC finally relented with a final negotiated amount of only 30 cents on the dollar.

The Boston Globe cited bankers dismissing the bailout as “relatively routine” – but the federal documents reveal it was anything but. The FDIC agreed to accept nearly $5 million in cash to retire $15 million in Bain’s debt – an immediate government bailout of $10 million. All told, the FDIC estimated it would recoup just $14 million of the $30 million that Romney’s firm owed the government. In the end, the government surrendered. At the time,cited bankers dismissing the bailout as “relatively routine” – but the federal documents reveal it was anything but. It was a raw deal – but Romney’s threat to loot his own firm had left the government with no other choice. If the FDIC had pushed Bain into bankruptcy, the records reveal, the agency would have recouped just $3.56 million from the firm.

It’s a fantastic piece of journalism that shows how Romney used his connections within the FDIC to start the negotiations and then used his position to blackmail the banks and the government to ensure that he came out on top.

Mitt Romney basically stole at least $10 million from taxpayers through a government bailout of Ban Capital and now claims that this type of business acumen qualifies him to run the country.

Mitt Romney is the real life incarnation of Gordon Gekko. He not only should not be on the national stage running for president, if there were any justice in this country, he should be in prison.