Friday, August 31, 2012

Coming: "Romney Got a Bailout" Foofraw

From the Obama Partners at Rolling Stone, Sept 13 issue,

The Federal Bailout That Saved Mitt Romney

Except it wasn't really a bailout. 
FDIC accepted a deal for 5 million and forgave 10 million owed to a bank it had taken over. 

Whether the Bain Capital partners 'looted' the Bain & Co. consulting house depends on your point of view. A consulting house doesn't invest.

What's stated then ignored is Bain Capital wrote off  75 million owed them.
It will be interesting to see how this shakes out.

UPDATE:
- On writing this I've not looked at any rebuttal.  Just the RS article.  {But I was jogged into it by a progressive on another site, wondering how I would explain it.}

Indeed Rolling Stone DID include all the pertinent facts, As far as I've read so far...kudos to them for that.
It's just their interpretation that's a little odd... to anyone who has the least idea of how corporate systems work.  I barely know, but the holes in the bailout argument were apparent to me.  While I DO understand how 'Progressives' would see it.... HOWEVER..
Key Point: A 'bailout' implies that tax money was somehow involved. Ummmm... nope.
I suggest anyone who doesnt understand how it's not especially shady or illegal read the article over several times until they at least understand the viewpoint.  It's all there.
Key points:
1. Bain and Company is a consulting house. 
2. Bain Capital is an Investment house.
- How much operating capital - Reserves- are required for each. The idea that the partners, being the same in both, somehow 'raided' the consulting house is ludicrous.

RS explains how Bain and Company came on hard times. As a separate corporate entity it would have been ethically wrong, if not outright illegal, for the Bain Capital partners to just inject cash to keep it afloat.
RS implies that it would have been better for the consulting house to go into bankruptcy. Better for whom?  FDIC as the operator of the seized bank would still have taken the hit, If not a bigger one.
RS correctly points out that Bain and Company... whose business it is to advise  clients on avoiding bankuptcy and hostile takeover... would have been effectively killed by declaring.
And FDIC was simply doing what it does in these cases, I see no evidence of 'cronyism' or special favors.

Leading us to the poison pill: Using the 30 million reserves still held for unearned bonuses.  That is standard operating procedure and meant to be used AGAINST takeover and milking assets, then selling off the remainders.
Exactly what Bain and Company counseled their clients to do, one would assume.

Update - Third Thought: What Rolling Stone wrote around, and didnt focus on, was why Bain and Company had all those loans outstanding in the first place. 
Why would any bank extend such credit lines to a floundering company? 
Perhaps THAT is the devil in the details. Just sayin'...

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