Rolling Stone has an excellent, illuminating article out today on the federal bailout Mitt Romney obtained when he supposedly “rescued” Bain & Co.
According to documents obtained by Rolling Stone, Mitt Romney screwed taxpayers out of at least $10 million right after paying generous bonuses to executives at Bain & Co., leaving the company in debt and on the verge of insolvency.
In March 1992, according to the FDIC documents, Romney approached the banks and played the bonus card. Allow Bain to pay off its debt at a deep discount, he demanded – just 35 cents on the dollar. Otherwise, the “majority” of the firm’s “excess cash” would “be available for the bonus pool to its officers at a vice president level and above.”
The next month, when the banks balked at the deal, Romney decided to prove he wasn’t bluffing. “As the bank group did not accept the proposal from Bain,” the records show, “Bain’s senior management has decided to go forth with the distribution of bonuses.” (Bain’s lawyers redacted the amount of the executive payouts, and the Romney campaign refused to comment on whether Romney himself received a bonus.)
Romney’s decision to place executive compensation over fiscal responsibility immediately put Bain on the ropes. By that July, FDIC analysts reported, Bain had so little money left that “the company will actually run out of cash and default on the existing debt structure” as early as 1995. If that happened, Bain employees and American consumers would take the hit – an alternative that analysts considered “catastrophic.”
But Romney didn’t dole out all of Bain’s cash as bonuses right away. According to a record from May 1992, he set aside some of the money to put one last squeeze on the firm’s creditors. Romney now demanded that the banks and the government agree to a deal that was even less favorable than the last – to retire Bain’s debts “at a price up to but not exceeding 30 cents on the dollar.”
The FDIC considered finding a buyer to take over its loans to Bain, but analysts concluded that “Bain has no value as a going concern.” And the government wasn’t likely to get much out of Bain if it allowed the firm to go bankrupt: The loan agreement engineered by Romney had left the FDIC “virtually unsecured” on the $30.6 million it was owed by Bain. “Once bonuses are paid,” the analysts warned, “all members of the bank group believe this company will dissolve during 1993.”
With the help of cronies at the FDIC, some of whom were former Bain employees or proteges of his father and former presidential candidate, George Romney, the government decided to cut its losses before they grew bigger. And according to Rolling Stone, the government could have recouped only $3 million rather than $14 million if the firm went into bankruptcy.
Mitt Romney swindled the goverment. He swindled the taxpayers. And he’s hoodwinked the media with the idea that he’s “mister competence.” If by competence you mean competent at selling his own grandmother to make up a buck, with such dishonor and moral contempt he would make Voldemort blush, then perhaps that’s fair.
Are you listening, Republicans? Are you listening, so-called fiscal conservatives? Romney took a federal bailout and used debt as the leverage he needed to secure the bailout. Romney paid himself and his fellow executives with debt that YOU ended up paying for. Do you care? Or is it okay, because success, liberty, exceptionalism, etc etc.
Read the full article here, then watch Romney speak about his great success tonight.