As Cole notes, Bain Capital is the gift that keeps on giving. The Obama campaign handed it over wrapped up nice and the media is now running around with it like kids on a Christmas morning sugar-high.
Even if Romney hadn’t committed perjury about his involvement, the ongoing discussion about Bain Capital’s investment activities (as outlined in the Bloomberg article by Anthony Luzzatto Gardner that Cole and I both linked to) would be almost enough to sink the SS Willard at the very beginning of its three-hour tour.
Romney’s only real selling point (other than not being near) is that he is a “businessman” who can run the country at a profit for everyone.
Now that talking point is being supplanted by the reality that Romney was a
venture capitalist corporate raider who didn’t care about building businesses, but was prepared to do anything, no matter how dodgy, no matter how many lives and companies were destroyed, to make money for Bain Capital, its partners and its sole shareholder, one Willard Mitt Romney.
Blodget speculates about just how Romney collected the hoard of gold he sleeps on every night.
This is also probably part of the explanation about how Romney got so rich so fast: If he was the sole shareholder of Bain Capital 15+ years after its founding, this would be like Steve Schwarzman being the sole shareholder of The Blackstone Group, a private-equity firm he co-founded and runs. The Blackstone Group trades publicly and is worth more than $6 billion (and has thousands of shareholders in addition to Mr. Schwarzman). So unless Mitt Romney sold out of a lot of his stake in Bain, it would be conceivable that he could be worth a great deal more than the $250 million most people think he is worth.
(Bain isn’t public, so we can’t assess its financials. But it’s a big, successful private equity firm, so it is presumably worth a lot.)
Lastly, these filings may explain how Romney could legitimately have accumulated so much money in his IRA.
If Romney was given 100% of the stock of Bain Capital when it was started, he might well have stashed some of these shares in his IRA. At that moment, when Bain Capital was little more than a document of incorporation, the shares would have been worth basically zero. So Romney could have perfectly legitimately stuffed a big percentage of the stock of Bain Capital in his IRA and still not exceeded the $2,000 annual donation limit.
I’m also intrigued by this part of Blodget’s piece:
The filings said that Romney was the “sole shareholder” of Bain Capital in the 1999-2002 period, more than 15 years after Bain Capital was founded.
If this is true, it is very startling, and it raises a host of additional questions:
Why would Romney be the sole shareholder of a firm launched within Bain Consulting? Wouldn’t Bain want to own a piece of it?
Why did Romney get 100% ownership of the firm?
Weren’t there any other partners added along the way?
Now, it’s clear that Bain Capital has always had a number of partners, starting off with 5 and rising to 18 in about 1999 when Romney “departed” to play at Olympics for a few years. They were presumably being remunerated pretty well, even if they didn’t own the company. I can also see that there were legitimate conflict of interest reasons for keeping the two Bain businesses separate.
However, it still puzzles me how Bain Capital managed to become almost entirely a cash cow for Mitt Romney’s IRA.
Lawyers advised separating the investing venture from the consulting business to avoid a conflict of interest. To ease Mr. Bain’s concerns about yielding control, Mr. Romney set up a complicated partnership structure that gave Mr. Bain the right to fire him. In the early years, Bain & Company partners received a cut of Bain Capital profits, as well, although Mr. Romney later persuaded Mr. Bain to give that up.
Still, Mr. Bain recalled, “all the risk and investment was basically on my side. I was clearly putting my neck on the line and the company on the line.”
Can someone explain this to me?