How Bain Capital (And Mitt Romney) Profited

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RICKAMAVEN
Herf-A-Holic Topic Starter

13 years ago

One of Mitt Romney’s most challenging
tasks as the Republican nominee for
president is to explain his business career,
which has been the subject of attacks since
last winter’s primaries. The genesis of his
extraordinary wealth is something that he’s
rarely spoken about on the campaign trail in
detail. And when he finally did try to address
the issue at the Republican National
Convention, he never actually mentioned the
name of the private equity firm he ran for
decades – Bain Capital.

A new report by Politicker’s Hunter Walker
helps explain why Romney shies from
defending his firm’s practices. In addition to
buying companies – often strong companies
that could be loaded with debt, Bain also
invested in firms that could wring profit from
crisis. Consider Equity Specialty Holdings, a
reinsurance startup specifically created to
purchase debt from insurance companies
badly hit by the 9/11 attacks.

Walker reports that “Mr. Romney was
invested in Endurance Specialty Holdings
both through Golden Gate Capital, a private
equity firm founded by a former Bain Capital
executive in 2000 and through his direct
interest in another investment firm, CCG
Investment Fund, LP.”

The opportunity for Equity Specialty
Holdings was simple. Its management could
invest in insurers that badly needed to cover
losses due to 9/11, and reap enormous
benefit from the increased fees that the
surviving insurance companies could then
charge. The results were astounding: “Over
the next nine months, the company
generated a net income of $63.5 million. By
the end of 2003, the company was reporting
net income of $263.4 million.”

The Romney family disavows any knowledge
or responsibility for this investment, saying
that their money is in a blind trust. Famously,
Romney dismissed Ted Kennedy’s identical
response in 1994, ridiculing blind trusts as
an “age-old ruse.”

Bain’s reinsurance investment occurred in
that murky period when Romney had left
Bain in order to work on the 2002 Winter
Olympics, yet remained the CEO of the firm.
During that period, Bain made many of its
most controversial layoffs and investments –
including investing in Stericycle, a company
that went on to dispose of aborted fetuses. A
Bain executive has said Romney retained his
position in Bain as leverage while he
negotiated his retirement package. The
implication is that he retained the power to
affect the company’s business.

The world of private equity baffles most
Americans with its tangled web of ownership
and the ability to profit off bankruptcies. But
it’s understandable that Romney would seek
to distance himself from controversial
investments. Profiting from 9/11 doesn’t fit
well with his campaign slogan, “Believe in
America.”

Edited by user 13 years ago | Reason: CHECK OPTIONS

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HockeyDad
Herf-A-Holic

13 years ago

Private equity firms most often purchase weak companies. The whole idea is to turn around the failing companies and then sell them for a profit once they are fixed. If you are an employee at a company taken over by private equity, it is often painful and then you get to make commercials for the Obama campaign.

Without private equity firms, the alternative for most of these weak companies is bankruptcy liquidation.

When making a profit is considered a bad thing, the USA is done.

Mathen
Herf-A-Holic

13 years ago

Since when did profit become a dirty word?

Oh yeah, it's not. At least not to me

DrMaddVibe
Herf-A-Holic

13 years ago

Who owns Obama's Chicago mansion?

snowwolf777
Herf-A-Holic

13 years ago

Yes, I'm sure the folks at all those failed businesses that Bain tried to make profitable would have much preferred the GM/Chrysler plan:

Run a bloated, out-of-touch, failed union business model for decades, get the POTUS to declare you're too big to fail, have a couple tractor/trailers full of taxpayer cash delivered to your doorstep, and break it off in all your investors backsides.

Then you strut around and tell everyone "Look at us! We're toughed it out through hard work and are still in business. Aren't we so smart and special!"

ZRX1200
Herf-A-Holic

13 years ago

MAGIC UNDERWEAR BEOTCH!
🐴 😳 [whip]

dstieger
Herf-A-Holic

13 years ago

Since when did profit become a dirty word?

Oh yeah, it's not. At least not to me

Mathen wrote:

'Wealth' is another one that's used more and more as if it is disparaging. wtf

teedubbya
Herf-A-Holic

13 years ago

And if you want to start a business up borrow from your parents

bloody spaniard
Herf-A-Holic

13 years ago

Bain blind trust rape OUTRAGE!!

Now, let's torch another KFC in Tripoli!! [ram27bat]

HockeyDad
Herf-A-Holic

13 years ago

#10

And if you want to start a business up borrow from your parents

teedubbya wrote:

Do it the government way instead....borrow in the name of your children!

HockeyDad
Herf-A-Holic

13 years ago

#11

Bain blind trust rape OUTRAGE!!

Now, let's torch another KFC in Tripoli!! [ram27bat]

bloody spaniard wrote:

They torch a Chick-Fil-A and we may finally have the spark we need to draw out the Christians and get the Holy War started!

bloody spaniard
Herf-A-Holic

13 years ago

#12

And if you want to start a business up borrow from your parents

teedubbya wrote:

Pffffft. I'm getting my seed money for a second business from a Nigerian pen pal!! (in my best Thurston Howell III).😒

teedubbya
Herf-A-Holic

13 years ago

#13

Pffffft. I'm getting my seed money for a second business from a Nigerian pen pal!! (in my best Thurston Howell III).😒

bloody spaniard wrote:

I was sort of hopeing all the money I sent to charlie when he was in England would be considered seed money but it's beginning to look like a bad investment. Maybe Charlie IS Romney?

bloody spaniard
Herf-A-Holic

13 years ago

#14

They torch a Chick-Fil-A and we may finally have the spark we need to draw out the Christians and get the Holy War started!

HockeyDad wrote:

:-k
Chick-Fil-A just doesn't do it for me. I'm saving my rage for a film ridiculing Popeye's.

bloody spaniard
Herf-A-Holic

13 years ago

#15

I was sort of hopeing all the money I sent to charlie when he was in England would be considered seed money but it's beginning to look like a bad investment. Maybe Charlie IS Romney?

teedubbya wrote:

Charlie MUST be rich. He was complaining the other day that his hands always smell like cabbage. Imagine that? He can't wash off the greenback stank.

DrafterX
Herf-A-Holic

13 years ago

#16

I gonna grow hemp.... 😟

bloody spaniard
Herf-A-Holic

13 years ago

#17

I gonna clone shemp.... 😟

DrafterX wrote:

:-k

DrafterX
Herf-A-Holic

13 years ago

#18

🤔

teedubbya
Herf-A-Holic

13 years ago

#19

my deek looks like a shrimp.... 😟

DrafterX wrote:

DrMaddVibe
Herf-A-Holic

13 years ago

#20

And if you want to start a business up borrow from your parents

teedubbya wrote:

If you were a Kenyan kid with dirt floors and political ambitions, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this Manchurian Candidate that we have that allowed him to thrive. Somebody invested in roads and bridges. If you’ve got a Empty Suit and a court jester sidekick -- you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

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