Skip to comments.Froma Harrop: The Missing 'Humanity Clause' At Bain (This will make your blood boil
Posted on 01/14/2012 2:24:16 AM PST by Laissez-faire capitalist
... Under Romney's leadership Bain bought majority control of World Wide Grinding Systems in 1993. It put up $8 million of the $75 million purchase price and borrowed $125 million by issuing bonds. Bain immediately sent investors $36 million in dividend checks...
A steel business is capital-intensive and sensitive to economic conditions. That's why it needs to conserve money for the lean years. When the economy did go south, so did GS Technologies. GS Technologies went bankrupt in 2001, the plant closed and 750 workers lost their jobs.
Bain skipped out on a previous agreement to provide severance pay and health benefits coverage if that happened. The workers saw their pensions slashed by up to $400/month. But Bain walked away from the smoking ruins $12 million richer, not including $4.5 million in consulting fees.
And it had tapped government as well. The company had extracted $3 million in tax savings from Kansas City... The Federal Pension Benefits Guarantee Corp bailed out the company's underfunded pension plan to the tune of $44 million [taxpayer-funded]
(Excerpt) Read more at sunjournal.com ...
You are siding with the leftist, nanny state, “let's pass some more regulations to stop this sort of stuff” crowd. The author of this article is a Leftist. All the Leftists are on you side on this one. Don't you feel just a little uncomfortable? They are ALWAYS wrong, you know!
There are plenty legitimate ways to attack Romney without attacking free, legal enterprise.
Exactly! That is their business model to come out on top. However, if they make a company more successful, the more they come out on top! Their business model is based on providing companies with an infusion of cash so they can survive and thrive.
They want the companies to succeed! The two recent examples that the left and certain unstable members of Freerepublic are screaming about failed because of a Union Strike theat caused the company to shutter its doors and a whole industry failing. Both events out of their hands.
If Bain had a choice they would have wanted these companies to succeed to collect more profits from their risky investment. They would be stupid to not take advantage of Government subsidies freely offered and not to demand a return on their extremely risky investment in failing companies. Does anyone sane person believe without demanding a return on their investment any venture capitalist would supply the needed capital needed to a dying company?
Don’t care if someone says they’re from the right or the left, if their arguments are factually sound.
I’m not saying there needs to be more lawsI think there ought to be fewer laws. There should be fewer laws that protect crony corporations from accountabilityalong with less loose government monetary policy which inflates easy credit that makes reckless LBOs like those of Bain Capital more possible. Get government interference out of the market.
You wannabe-capitalists ought to go shill for Solyndra and more TARP bailouts. You make me sick.
Arg... next time I might proofread.
I say that the left will spin this cruel capitalist meme for all it’s worth.
I say it may have been a mistake for Perry and Newt to hit this, but I’d need to know more about the overall practices of the company to be sure.
We can be capitalists without accepting corruption and theft.
I don’t know about Newt but I know Perry has a proven record of being pro-business and pro-capitalism and cannot be logically attacked on this score.
We’ll just have to see how it plays out. (mad at Rush right now though)
I wannabe a capitalist. Capitalism is great.
But not, by destroying American jobs.
Haven’t we all seen how that’s turning out, already?
Beam me up, Scotty.
“You make me sick.”
Your good at sniping & name calling, & not much else.
Blankfein justified it by simply stating that it's "just business" to make money for the firm. No morals. No ethics. Just greed.
Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other. - John Adams
If we don't vote for righteous men, we get what we deserve.
Some doctors deliver babies and also perform abortions.
How many healthy babies delivered do you calculate to make up for each aborted baby?
in the same vein, how many successful ventures does it take to excuse the intention killing off of going concerns in order to plunder their assets?
I haven't seen any account of union strike company, so I have no comment on that. To what extent Bain may have failed in due diligence ahd so did not foresee union troubles or to what extent they merely overestimated their ability to deal with the union, I don't know.
So why was Bain making "extremely risky" (your term) investments only justified to them by the promise of gov't subsidies? The problem with government subsidies is that they tend to be ill-thought-out or precisely designed to reward the politically connected -- or both. Also, the gov't is playing (as usual) with other people's (i.e., taxpayers') money.
I don't think a tunnel-vision approach to making money at whatever cost to others (or to the economy or to the country for that matter) is a conservative value, else FR would be celebrating and praising George Soros, instead of condemning him.
Technically your right... Bain provided Private Equity to most of these companies to turn them around. Most of the companies were failing or about to go bankrupt.
The union strike company was featured in the King of Bain video. Remember the strike happened after the company fired all of it’s employees and rehired them. However, once the company exceeded hiring 51% of the employees back they were forced by state laws to unionize. Immediately the union went on strike. The company closed their doors.
The second company mentioned was a steel company. The whole industry started to collapse years after Bain’s investment.
The companies that Bain invests Private Equity / Venture capital outperform the S & P four to one. Thousands of companies apply for Bain’s Private Equity money yearly. They are one of the best performing companies of this type in the nation. They meet or exceed the national average for Venture Capital / Private Equity Firms in successful outcomes.
An American steel plant went out of business because they couldn’t compete with cheaper foreign imports? Gee, that’s never happened before. During this same stretch, one half of all steel jobs in this country would be lost. Maybe if the union workers hadn’t gone on strike for 2½ months for even more money and bigger benefits, things might have gone better for them. Speaking of, isn’t it the United Steel Workers union that handles the pension fund? I would be asking them about what happened to the pension money. But $44 million is a drop in the bucket compared to the $1.9 billion that the Pension Benefit Guarantee Corp paid out to LTV Steel that same time.
Where was Bain in all this? Just asking who was in charge of the firing and rehiring. Sounds like a truly stupid thing to do without knowing the applicable state law.
Without knowing more, I suspect it might have been better than firing to let the company go into Chapter 11; I believe Bankruptcy Court judges have the authority to void or insist on renegotiating contracts. (For the same reason as I understand it, it would have been better for GM and Chrysler to go into bankruptcy. Also more legal.)
Much of the rest of your post sounds as if it were lifted verbatim from Bain promotional material! If not, maybe you could get a job writing it for them! :) (Just trying to be constructive!)
The attraction to gov't subsidies and taxpayer bailouts remains a problem though. I've asked what percentage of Bain turnaround targets involved such thing and either no on knows or just haven't bothered to answer.
I'm glad you said it, now I don't have to. Unions don't generally "run" a pension plan, companies do. G.M. being a notable exception with the union playing a dual role as "owner" too.
And I see you already have a reply telling you about those awful union run pension plans. Some just never will "get it".
Some skilled trades unions may be exceptions too - company funded and union supervised but that's a situation where the members don't just work for a single company but go from company to company, depending on where the work is.
Nobody is attacking free enterprise, except a bunch of wilfully blind RINOs who can’t seem to see the difference between asking reasonable questions about a candidate’s record and “attacking capitalism.”
Romney has boasted about his “business,” trying to give the impression that he was a captain of industry, but avoiding the fact that his activity was actually in the highly speculative financial sphere. There is nothing wrong with this, but he should be honest about it. However, because the Dems have vilified “Wall Street,” he doesn’t want to be connected with it.
There are also questions about some of the deals the company did, particularly those done during the heyday of “vulture capitalism,” which didn’t mean buying and restructing failing businesses, but buying anything you could get, stripping the assets out of it and dumping it. These things may all have been perfectly legal, but that doesn’t make them right or beneficial to anybody’s economy except that of the speculator.
In addition, some of these things were done relying on the fact that the government would come in to make up the difference; it was possible to take the entire pension fund as “management fees” because the fund was government insured and the government would bail it out.
Romney has explained none of this. But he sure has been successful at duping a bunch of people who should know better, convincing them that somehow defending his lies is defending “capitalism.”