Vulture capitalists Romney-Gekko 2012

Posted by AzBlueMeanie:

The L.A. Times published A closer look at Mitt Romney's job creation record at Bain Capital:

Now a front-runner for the Republican presidential nomination, Romney says his Bain experience shows he knows how to create jobs. He often cites Bain's investment in a little-known office supply store called Staples, which now employs more than 90,000 worldwide.

But a closer examination of the prospectus paints a different picture of Bain's operation. Under Romney's leadership, Bain became one of the nation's top leveraged-buyout firms, helping lead a trend in which companies were acquired using debt often pledged against their own assets or earnings.

Bain expanded many of the companies it acquired. But like other leveraged-buyout firms, Romney and his team also maximized returns by firing workers, seeking government subsidies, and flipping companies quickly for large profits. Sometimes Bain investors gained even when companies slid into bankruptcy.

Romney himself became wealthy at Bain. He is now worth between $190 million and $250 million, much of it derived from his time running the investment firm, his campaign staffers have said.

Bain managers said their mission was clear. "I never thought of what I do for a living as job creation," said Marc B. Walpow, a former managing partner at Bain who worked closely with Romney for nine years before forming his own firm. "The primary goal of private equity is to create wealth for your investors."

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Four of the 10 companies Bain acquired declared bankruptcy within a few years, shedding thousands of jobs. The prospectus shows that Bain investors profited in eight of the 10 deals, including three of the four that ended in bankruptcy.

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According to the prospectus, prepared in late 2000 by a division of Deutsche Bank Securities, investors could participate in Bain's funds with a minimum investment of $1 million. Bain Capital's portfolio started with a preponderance of simple investments like Staples, but shifted heavily toward more complex leveraged buyouts and other deals within several years, according to former Bain partners.

Leveraged buyouts allow investors to purchase businesses with the acquisition funded sometimes by significant amounts of debt. To critics, these leveraged deals can make acquired companies more vulnerable to economic downturns, leading to a greater likelihood of bankruptcy and job cuts. At the same time, the deals sometimes introduce discipline to firms and even whole industries that need it.

Either way, Bain investors typically profited.

You get the gist of the article. Steve Benen writes Putting Gordon Gekko on the ballot:

All of this has given some Romney critics a good idea.

The labor-backed Americans United for Change is today unleashing a multimedia campaign linking Romney, a former venture capitalist, with Gordon Gekko, the fictional, greed-crazed titan from the 1987 Oliver Stone film “Wall Street.”

The effort includes a new website, www.RomneyGekko.com, which offers an interactive quiz challenging readers to decide whether Romney or Gekko uttered a phrase; a fake Twitter account, @RomneyGekko; a plan to station “Romney-Gekko” supporters outside the candidate’s big-ticket fund-raisers; and web videos led by one pivoting off Ronald Reagan’s famed “It’s Morning in America” theme.

The video doesn’t pull its punches.

Romney has to know this is coming, but I’m not sure what he can do about it.

Indeed, he can’t even pivot away from his private-sector layoffs to public-sector success. During Romney’s one term as governor — his only service in public office — his state’s record on job creation was “one of the worst in the country,” ranking 47th out of 50 states in job growth.

Vulture capitalist layoffs, followed by one term of failure, isn’t a great combination.

Ouch! Thats gotta hurt.