Romnomics

Romney Economics: Bankruptcy and Bailouts

Kansas City's GST Steel had been making steel rods for 105 years when Romney and his partners took control in 1993. They cut corners and extracted profit from the business at every turn, placing it deeply in debt. When the company eventually declared bankruptcy, workers not only lost their jobs but were denied their full pensions and health insurance, and the government was forced to step in and provide a bailout.

http://www.romneyeconomics.com/gst/gst-intro

The Romney Model

"I never thought of what I do for a living as job creation. … The primary goal of private equity is to create wealth for your investors."

– Marc B. Walpow, former managing partner at Bain Capital, the firm where Mitt Romney was CEO, who worked closely with Romney for nine years.

http://articles.latimes.com/2011/dec/03/nation/la-na-romney-bain-20111204

Profiting From Debt

With Dade Behring, Mitt Romney and his investors took over a healthy company and loaded it with debt. Rather than sell the company, they then had Dade take out even more loans to buy out their shares, driving the company into bankruptcy. Nearly 3,000 workers lost their jobs, while Romney and his partners made more than $250 million in profit.

Profits and then layoffs

http://www.nytimes.com/2011/11/13/us/politics/after-mitt-romney-deal-company-showed-profits-and-then-layoffs.html

Profit at any cost

* Bain in 1988 put $5 million down to buy Stage Stores, and in the mid-’90s took it public, collecting $100 million from stock offerings. Stage filed for bankruptcy in 2000.

* Bain in 1992 bought American Pad & Paper (AMPAD), investing $5 million, and collected $100 million from dividends. The business filed for bankruptcy in 2000.

* Bain in 1993 invested $60 million when buying GS Industries, and received $65 million from dividends. GS filed for bankruptcy in 2001.

* Bain in 1997 invested $46 million when buying Details, and made $93 million from stock offerings. The company filed for bankruptcy in 2003.

Romney’s Bain invested 22 percent of the money it raised from 1987-95 in these five businesses, making a $578 million profit.

http://wickershamsconscience.wordpress.com/2012/01/13/the-real-problems-with-romney-bain-capital/

While we will probably never be able to measure the true numbers, it seems pretty clear that ‘looting’ is an inaccurate description of what happened with these companies.