Romney and his campaign have launched a new site touting Mitt’s private-sector experience: SterlingBusinessCareer.com. Under a section called “Fixing Businesses,” the campaign lays out the legend of Romney’s 1990 return to the consulting firm Bain & Company, describing his turnaround effort there as an “incredible success” that returned the firm to profitability “in just a year.” That is a lie. [...] Bain & Company was only rescued from the brink of collapse by the federal government. In 1993, the FDIC agreed to wipe away more than $10 million it was owed by Romney’s firm because it believed that “the company will fail if the debt is not modified.”
Why did the FDIC believe that? Because,
Bain had inserted a poison pill in its loan agreement with the banks: Instead of being required to use its cash to pay back the firm’s creditors, the money could be pocketed by Bain executives in the form of fat bonuses – starting with VPs making $200,000 and up. [...] What’s more, the bonus loophole gave Romney a perverse form of leverage: If the banks and the FDIC didn’t give in to his demands and forgive much of Bain’s debts, Romney would raid the firm’s coffers, pushing it into the very bankruptcy that the loan agreement had been intended to avert. The losers in this game would not only be Bain’s creditors – including the federal government – but the firm’s nearly 1,000 employees worldwide.
According to records, Bain’s management did take its cash reserves and distributed executive bonuses when the banks / FDIC wouldn’t forgive its debt at steep discounts. However, the amounts each executive received were redacted by Bain’s attorneys, and the Romney campaign refused to comment on whether Willard took a bonus himself. But get this:
The FDIC agreed to accept nearly $5 million in cash to retire $15 million in Bain’s debt – an immediate government bailout of $10 million. All told, the FDIC estimated it would recoup just $14 million of the $30 million that Romney’s firm owed the government. It was a raw deal – but Romney’s threat to loot his own firm had left the government with no other choice. If the FDIC had pushed Bain into bankruptcy, the records reveal, the agency would have recouped just $3.56 million from the firm.
[...] The debt forgiven by the government was booked as a loss to the FDIC – and then recouped through higher insurance premiums from banks. And banks, of course, are notorious for finding ways to pass their costs along to customers, usually in the form of higher fees. Thanks to the nature of the market, in other words, the bailout negotiated by Romney ultimately wound up being paid by the American people.
Even as consumers took a loss, however, a small group of investors wound up getting a good deal in the bailout. Bain Capital – the very firm that had triggered the crisis in the first place – walked away with $4 million. That was the fee it charged Bain & Company for loaning the consulting firm the services of its chief executive – one Willard Mitt Romney.
That is an incredible “success” story, isn’t it? It certainly describes a person who should be rewarded not only with the most important job in the free world, but also with the perfect position to approve another nice tax break for himself once he gets that job, right?
And it would only make sense if Bain Capital received nice, hefty consulting fee for loaning Mitt Romney’s services to America — with Mitt receiving a generous cut of that fee in his pre-negotiated retroactive retirement fund, naturally. Because if you’re voting for Mitt Romney, you might as well admit you wouldn’t be surprised by those terms — and you might as well admit his “business experience” would be a sad joke on the country if he were elected POTUS.
[Thanks to reader Johnny Roach]