Well... yes and no.
On the top, highest level “optics,” it is a bad comparison. But hey, Romney is the guy who made the comparison, so he’s welcome to the results of his own doing.
Both situations often involve stiffing people in BK court. GM’s bond holders were stiffed, Bain stiffed people holding debt on the companies they strip-mined for capital.
The way some LBO firms work is to load up their acquisitions with debt, the interest on which is deductible, and pull out equity and cash via fat dividend payments. When they’re done pulling out the equity through financial engineering, they can toss the husk onto the junk heap in BK court.
GM involved a bunch of financial and legal maneuvering to stiff owners of the common and preferred stock, as well as debt holders. Those who gained were the new owners, the UAW and their pension funds.
The ideas were similar - what is tantamount to theft, but through financial engineering and tax arbitrage. The beneficiaries were different.
And hey, Harvard MBA’s were involved in both situations, so there’s that similarity too. GM’s CEO Wagoner was a Harvard MBA... and like so many Harvard MBA’s, he got his, and screwed the owners of the company.
If I had my way, Harvard Business School would be used as a USAF ordnance range. Why bomb perfectly nice pieces of the high western deserts of the US when there are so many more deserving pieces of real estate?
“If I had my way, Harvard Business School would be used as a USAF ordnance range. Why bomb perfectly nice pieces of the high western deserts of the US when there are so many more deserving pieces of real estate?”
Thank you! That image brightened my day.
(Do not forget Harvard Law . . .)