Texas Gov. Rick Perry caused a stir within the Republican Party by denouncing former Massachusetts Gov. Mitt Romney as a “vulture capitalist.” The outrage within the Republican establishment was so strong that Gov. Perry stopped using the phrase ( he dropped out of the race on Jan. 19). He has not yet tendered an apology. Fairness demands that he do so. He should apologize to vultures.
Unlike former Gov. Romney, vultures never kill their prey. They eat only carrion and serve a useful purpose in consuming and effectively recycling road kill. In our economic system a vulture capitalist would be the wholesaler who shows up at a liquidation sale, buys the bankrupt merchant’s inventory and then resells that inventory at a profit. He creates a few jobs and helps the bankrupt merchant pay some of his debts.
Mitt Romney and his fellow investors had a hand in the death of quite a few companies. According to the Wall Street Journal, 22 percent of the companies Mitt Romney acquired through Bain Capital in the 15 years he ran that leveraged buyout firm were either bankrupt or out of business within eight years of Bain Capital’s acquisition.
A typical leveraged buyout began with a relatively small investment of money from Bain Capital, “leveraged” with lots of borrowed money to meet the purchase price, and a sale a few years later of the same company, now burdened by the debt that Bain Capital left it with. That 22 percent of these companies were “road kill” within eight years of Mitt Romney helping to acquire them does not make him a vulture. He and his cohorts at Bain Capital were more like a pack of wolves.
A pack of wolves find their prey, feast off it, and leave it for the vultures to finish consuming. In the natural world, a pack of wolves serve a gruesome purpose. In the corporate world, this wolf-like behavior of leveraged buyout specialists creates no new product and, too often, kills both the acquired company and the thousands of jobs it had provided to hard-working Americans.
For just $5 million of his company’s own money, Mitt Romney and the rest of his pack bought American Pad and Paper Company, made about $100 million for Bain Capital and its investors in “management fees” and profits, and then sold the company a few years later. American Pad and Paper Company went bankrupt due to its inability to carry the debt left to it by Bain Capital and every worker it employed lost his or her job.
One can still read online the Boston Globe’s analysis of this grisly feat of job killing.
Another sad story of the roadkill left by the wolves of Bain Capital is Worldwide Grinding Systems. According to Reuters, Romney and his fellow pack members made millions, the debt-laden company ultimately went under, and the federal government was forced to bail out the pension fund that the dead company could no longer finance. The wolves had their feast and the government had to clean up the mess.
There is a picture of Mitt Romney and his cohorts at Bain Capital that is being widely circulated on the Internet. It shows them dressed to the nines, smiling with almost frenzied grins, and showing off the cash they have “earned.” Set side-by-side with a picture of a pack of wolves looking up from its feast of a fallen caribou, this picture may become iconic.
Mitt Romney is now comparing his role in helping to kill 22 percent of the companies in which his company invested to President Obama’s role in saving General Motors and Chrysler. Let us not forget that Mitt Romney said that both companies should simply go straight to bankruptcy with no assistance from the government.
President Obama insisted that the government should help find a way to reorganize both companies, get rid of much of the debt they had accumulated, and preserve as many jobs of hard-working Americans as possible. Both companies are now producing cars Americans want to buy, hiring more workers to meet that growing demand, and boasting that, for the first time in a generation, the share of American companies of domestic auto sales is increasing.
We should not let Mitt Romney convince us that he is a job creator. Let us recognize a wolf in sheep’s clothing.
Arthur J. Greif is a lawyer who has an office in Bangor and lives in Bar Harbor.
youtube clip in defense of vultures
http://youtu.be/2Nb53-hw37c
OK , vultures are noble beasts so that doesn’t fit Romney. How about vampire capitalism ……. as in “that vampire capitalist has just sucked the life blood out of our company’.
Yup ….. that works …….VAMPIRE CAPITALISM
Vampires are too subtle, I’ll go with the wolf pack.
Un lobo en las plumas de buitre! Que un monstruo terrible!
For you nativists who are revolted by the appearance of Spanish words, I will translate: “A wolf in the feathers of a vulture! What a terrible monster!”
Gracias de parte de alguien que ama a los perros (GSDs), pero no lobos.
Well, on June 8, 2010 American Pad and Paper (AMPAD) was acquired by Esselte.
Unless Esselte routinely purchases “road kill” it would appear that AMPAD successfully emerged from its bankruptcy, an involuntary bankruptcy that was forced upon it by the Bankers Trust New York Corporation and other creditors, not Bain. And when Ampad went bankrupt, Bain held stock amounting to 30% of the company. Bain took a huge loss when their stock became worthless, just like everyone else.
http://corporate.esselte.com/enUS/PressReleases/Esselte_acquires_Ampad.html
Since Bain specialized in acquiring companies that were already in trouble, their success rate of 78% is remarkable.
BTW, among large investors in private equity are the California Public Employees Retirement System, New York State Teachers’ Retirement System and the National Public Radio (NPR) Foundation. So, I guess they’re either vultures or wolves, too. Capitalist pigs.
You are confusing American Pad And Paper Company, Inc., which attempted Chapter 11 bankruptcy and was forced into Chapter 7 dissolution because of the debt it had acquired under Bain Capital management, with American Pad and Paper, LLC., which was created some time after the dissolution. Dissolution of a company is death.
The sales volume and USA employee numbers were vastly higher for the corporation. The LLC was Texas-based and out-sourced most of its workforce to Mexico. Bain enjoyed a substantial net gain from its involvement even given the loss of its remaining equity share. Google both companies and you will see the entire story.
Acquiring naming rights from a bankruptcy litigation is hardly the same as rescuing and reorganizing a going business.
Since you seem conversant in this matter, could you give the date on which American Pad and Paper Company presumably closed its doors and discharged all its employees?
I worked at one time for a startup company which was purchased by another company. The original corporation was dissolved, but the dissolution had no deleterious effect. The physical assets, patents, etc. were transferred to the new company and all the employees retained their jobs.
You can google as well as I can. Start with the Boston Globe story which nicely tracks income and debt during the “Bain reign” at Ampad. Bain left it with debt of over $400 million and earned handsome fees on each highly leveraged acquisition. It sold most of its shares when Ampad went public, reserving only a 30% minority interest for itself.
Google the LLC and you will see that it is now Texas-based, with plants in Mexico and a smaller sales volume.
This took me about five minutes before my original post. I think it will take you about the same amount of time.
The Boston Globe? The same Boston Globe that printed photos purported to be of American soldiers raping Iraqi women and which turned out to be taken from a porn site and had nothing to do with our military? That Boston Globe? That beacon of truth?
And the Globe story, which has been repeated for about 18 years now as gospel, was written as a hit piece on Romney by slobbering admirers at the Globe during the 1994 Senate race between Romney and Ted Kennedy.
Bain tried for 8 years to make a success of Ampad, making numerous acquisitions during that period toward this end. Union unrest, among other factors, led to the failure of Bain’s effort. It was hardly the “raid the company and leave a carcass” scenario you paint. In the world of private venture capital there are sometimes failures, and Bain has a rather high rate of success in turning around companies which were teetering on the edge.
Your snideness is also much appreciated. I suppose it’s the last refuge.
I have no knowledge of the incident you cite, but if you condemn a publication for one error, condemn them all including FAUX News and their ilk.
You are making two logical errors:
(i) that an error by the Globe on the cited occasion makes all reports by the Globe unworthy of being reviewed and, if necessary, fact-checked; you have not challenged the essential point of the Globe article, that Bain Capital, under Romney, left the company with a $400 million unsustainable debt, sold its majority interest and left creditors with only 1/2 of their loans and shareholders with nothing; remember that Romney has spent a fair amount of time in this campaign complaining about the public debt;
(ii) that because I responded to your post I agree with all the columnist said; I never used the word “carcass” but I pointed out that your initial post confused an apple with an orange; you questioned my background and I frankly admitted that my post was based on five minutes of googling which I invited you to do; if you find that snide, I invite any reader to parse my post and discern the snideness.
I admired Romney’s father, particularly when he came back from Viet Nam and said the military was trying to brainwash him into supporting an unwinnable war. Governor Mitt Romney seemed a sensible moderate. I don’t recognize his latest incarnation and conclude that he is best described by Gertrude Stein’s description of her hometown of Oakland, California: “There is no there, there.” Romney believes in nothing but his own advancement. Paul, Santorum, and Gingrich actually believe what they say and, however wrong they might be, don’t abandon their core beliefs to fit the politics of the moment.
Great commentary.