Romney HAS a post-Bain record. Let’s look at it. (Possible Criminal Quid Pro Quo?)
May 28, 2012
Mitt Romney likes talking about his “private sector record at Bain Capital” as a “job creator”, saying that that experience makes him better suited to be president than Barack Obama. He doesn’t like talking about his time as governor of Massachusetts (2003-2007) with lousy economic record and pushing through a state-wide health insurance mandate that gives Tea Party members fits of indigestion. But no one ever seems to point out the obvious: that he was governor AFTER leaving Bain Capital in 1999. So we don’t have to guess what his business experience would bring to public office. Just go back and look. But before that, Romney was brought in to head the 2002 Salt Lake City Winter Olympic Games. How did THAT go as well?
So, what exactly did Mitt Romney do at Bain Capital do that would prepare him for the job of leading a state or entire nation?
First off, it is vitally important to understand that “Bain Capital” is only the “financial services division” of a management consulting firm Romney worked for called “Bain & Company”. Mr. Bain himself appointed Romney to his new financial services division, “Bain Capital”, in 1984 (unverified via Wiki), managing their investments, providing venture capital, and purchasing distressed businesses for their assets (see the movie “When Mitt Romney Came To Town” for more on this. Not every company they tanked was failing):
“Bain Capital’s” job was to make the parent company money. Period. So instead of rescuing distressed companies, Bain Capital did things like buying up companies with lots of assets but otherwise in need of money to return to profitability, then liquidate those assets. Bain also dabbled in “venture capital”, making startup loans to people with promising business ideas. Sometimes those investments paid off, like “Staples”… an office supply chain that got its startup money from Bain in 1986. But most times, it was FAR more profitable to simply buy a distressed company, drive it into the ground to extract every last bit of production value, raid the employees pension fund (dumping the obligation off on the U.S. taxpayer), fire everyone, sell off the company’s assets and close it down. But making money off venture capital investments can take years vs being a Corporate raider. So that’s typically what Mitt Romney did. He didn’t start “Staples” or “Sports Authority”. Other entrepreneurs actually did the heavy lifting of developing a business plan, seeking suppliers and running the day-to-day operations (though Romney DID sit on the Board of Directors for Staples for ten years… which is common among major investors in a startup.)
Romney left Bain in 1999 to become president of the “Salt Lake Organizing Committee” for the 2002 Winter Olympic Games following a “bribery scandal” that tarnished the reputation of Salt Lake City. Romney was the third person elected to head the SLC Olympic Committee in 18 months after the first two left amid scandal. Romney was appointed just 48 hours after the previous president was forced to resign amidst bribery charges. So why Mitt Romney? All this unethical behavior was a huge black-eye for the state of Utah. So basically, it was a PR move because Salt Lake City is the headquarters of the Mormon church and Romney… with “deep Utah roots”… was among the richest high-profile Mormon’s in the country.
As head of the Olympic organizing committee, Romney lobbied Congress for earmarks totaling $1.3Billion dollars to help pay for the Olympic Games (understandable for the first post 9/11 Olympics). During the 2008 GOP Primaries, Senator McCain called Romney’s Olympic largess “a National Disgrace”. So in 2008 when the auto industry needed $80Billion to save an entire industry, Romney says they should of “looked to the private sector” for funding, but when the corrupt SLC Olympic Committee needed a mere $1.3B to stay afloat, Romney went hat-in-hand to Congress to ask for a bailout. Bailouts for me but not for thee. Is this an example of Romney’s financial management skills acquired in the “private sector” at Bain Capital that he would bring to the job of President?
After the 2002 Olympic Games, Romney ran for governor of Massachusetts (home of Bain) touting his “managerial experience” via both his time at Bain and The Olympics. (ABC News recently uncovered video of Romney in 2002 bragging of his prowess of going to Washington and getting money for the Olympics as an asset to be governor) Romney won, serving one four-year term (2003-2007). The year before Romney’s election, Massachusetts fell from 14th place in job creation to 50th. Why? I’m not really sure. Some mention online of the plunge in the stock market at the start of Bush’s first year in office, but as for a specific cause, I couldn’t say (if you know, please Comment). So in the midst of this mess, Romney won the governorship promising “jobs” and “economic growth”.
Some stories from the intervening years:
November 2003: Romney fights to keep gay-marriage illegal. (I found that after his 1994 assertion that he would be “better on gay rights than Ted Kennedy”, Romney seems to have spent an inordinate amount of time trying to live down his “gay-friendly” image, focusing more on keeping “gay marriage” illegal than he did focusing on “job creation”.)
In the 2004 state-wide races, Romney campaigned heavily to get more Republicans elected to state office (and was defeated soundly).
This is where things get VERY interesting…
(I probably could of have made this section a post unto itself if not for the limited resources available to me.)
February 2005: Governor Romney unveiled his “jobs program” jointly with “Citizens Financial Group”… a Massachusetts bank… to provide small business loans to people who promise to create “one job for every $25,000 borrowed.” CFG approached Romney with the idea to offer super low-interest business loans, agreeing to assume all risk on loans of just 2.5% APR (well below the then national average of 5.5%). I found no reports of the contract being put up for a bid. Low-rate business loans with no risk to the state? Naturally, the Romney Administration jumped at the proposal. This all strikes me as very odd. Why would any bank lobby for the chance to assume all risk on low-return loans? Yes, they were given a monopoly, but at just 2.5% APR, they could of have cornered the market on their own. So I’m a bit stumped. Was this a Sweetheart Deal? CFG was run by Romney friend, “Staples” founder Tom Stemberg. Note: a month later, CFG was charged with fraud in an unrelated matter (“unethical or dishonest conduct” for “systematically targeting senior citizens” for sales of uninsured high risk/penalty variable-annuities.) Was this a case of Quid Pro Quo? Aiding Romney in exchange for leniency in their fraud case? After searching news archives from February of 2005 to January of 2009, I could find NO information regarding the outcome of the case nor if the case itself was even brought before a judge at all. This could suggest someone got the case dismissed, OR simply, the info is beyond the resources available to me online.
This “jobs program” was introduced by Romney following a corporate merger he was roundly criticized for not preventing (ibid “jobs program” link above) between “Proctor & Gamble” and “Gillette” that cost the state some 4,000 (edit: “4,000” appears to be the total job pool. More info needed) jobs. Interesting. A corporate buyout that led to the shedding of jobs for the profit of just one organization… does THAT sound like a skill Romney picked up from his years at Bain that he was able to apply to the role of Governor? It certainly appears as though Stemberg threw his friend Romney a lifeline (the cheap business loan program) when he needed it most.
This 2005 Bulletin from the SEC reveals that four employees of “Global Time Capital Management” were charged with “insider trading” that netted them over three-quarters of a million dollars during the 2004 “Citizens Financial Group” (CFG) merger with “Charter One Bank”. Among the people charged, two former CFG employees: hedge-fund manager Michael Tom and Shengnan Wang, as well as Tom’s brother David and Shengnan’s husband Hai Liu. The merged bank, “Citizens Bank” is the one that approached the Romney Administration with the idea for the low-rate small business loan “jobs program”. Wang, 29, received a tip from “a friend” still working at CFG about the pending merger, which she then shared with Tom and her husband Hai Liu. All of them were eventually convicted of insider trading, but not until 2009. Romney left office in 2007. I found no reports of Tom’s brother David ever being convicted. Liu also shared the tip with his brother “Zheng”, who was not charged (David Tom made $39K off his tip. Zheng Liu, less than $3K.)
March 2005: Romney ran radio ads attacking the State Senates’ decision to allow fetal stem cell research. Note, 2005 was NOT an election year. This makes Romney perfect for Right-wingers that think “bipartisanship” is a dirty word.
June 2005: Romney backed measures to ban gay-marriage AND civil unions. Again, Romney obsessing on “teh gays”.
November 2006: Romney fights to get gay-marriage on the 2008 ballot. This was the popular Right-Wing trick in 2004 to draw disillusioned Conservatives to the polls to help defeat John Kerry and retain a Republican Congress. Clearly, Romney was already greasing the skids for his own presidential run in 2008, hoping for lightning to strike twice.
Romney’s “jobs” record as governor:
As John McCain pointed out on “Fox news Sunday” yesterday, when Romney took office as governor of Massachusetts in January of 2003, the state’s unemployment rate was 5.6% (all figures via BLS.gov) and only 4.7% when he left office four years later. McCain surmised what this might have meant if only Romney had been elected president in 2008 instead of Obama (gee John, might YOU of have had something to do with that?). A great record. Who could argue with a “4.7% unemployment rate”? Until, of course, we compare this to the National numbers at the time. When Romney took office as governor, the National unemployment rate was 5.8 percent… two points higher than the MA rate. So he had a slight “head start” to begin with. Four years later, the National unemployment rate was just 4.4%… three points below Romney’s 4.7%. So in the four years Romney was governor, he did slightly worse than President Bush in that same four year timespan. While the nation saw a 1.4% drop in unemployment between 2003 and 2007, Massachusetts saw just a 0.9% decrease over that same period. Color me not impressed.
And… as I illustrated in detail two weeks ago… like most Republicans screaming about “spending” and “growth in the size of government”, Governor Romney was no different (if not worse than most), greatly increasing the size of the MA state government by 40,700 jobs (and if taken from his December, 2003 low after unemployment rose to 6.0%, Romney added 85,400 government jobs.)
Massachusetts (2003-2006)
By the end of Romney’s term four years later, the rate of private sector job growth (ie: “new jobs”) hardly budged. Massachusetts “rose” just three places nationally from 50th to 47th place. The state likely would of retained the title of “Worst state in the Nation for job creation” had it not of been for the collapse of the auto industry in Ohio & Michigan, and Hurricane Katrina devastating Louisiana. Again I ask: Is this another example of what Romney’s “private sector experience” brings to the job of president?
(Note: When Romney’s term ended, he left Massachusetts with a 34 percent approval rating.)
(Postscript: On an unrelated issue, I noticed something stunning at the end of Friday night’s “Who Do You Think You Are?” on NBC. Guest celebrity Rob Lowe learned that his earliest American relative was actually a Hessian (German) soldier fighting for the British against the American Colonists. The story had a happy ending though when Lowe received a letter from the D.A.R. (“Daughters of the American Revolution”) that confirmed that after deciding to stay in America, Lowe’s relative was deemed “a patriot” because records show his ancestor PAID HIS TAXES to help fund the Revolution:
200 years ago, paying your taxes made you a PATRIOT
(click to enlarge)What a concept.
Post-Postscript: A thought just occurred to me. Am I the only one that remembers during Bush’s first term, run-of-the-mill Republicans claiming that “the *previous* president is to blame” for all the problems of their successor because “all the policies they passed don’t take effect until *after* they’re out of office!” Ergo, Clinton’s success was all George HW Bush’s doing, and Bush-II’s failure was all Clinton’s fault. Or was that just MY brother-in-law and RW classmates?
Commenting open to all. Your feedback is appreciated.
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May 28, 2012
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Admin Mugsy · 
8 Comments - Add
Posted in: Crime, Economy, Election, Jobs, Money, Politics
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8 Responses
Interesting thoughts about the CFG deal. I’m surprised we haven’t heard more about this before.
Romney’s record after Bain … « Homeless on the High Desert - May 29, 2012
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This statement makes me think that almost no one took advantage of the program unless they wanted cheap money and already needed to hire someone. “promise to create “one job for every $25,000 borrowed.” CFG approached Romney with the idea to offer super low-interest business loans, agreeing to assume all risk on loans of just 2.5% APR”If I was starting a business and needed $500,000 to open, I would need to promise to hire 20 employees under this program. That is a lot of people and the money would not cover their salary for the first year. So the business would have to a lot of income. Now since it was a promise the question is how was it enforced?
I am hoping the Obama campaign is digging up all of this and will use it at the convention. It is too good not to use.
I love your blog, but it’s “could’ve” not “could of” and “might you have had” not “might you of had.”
Okay, I made the corrections.
Blame my lazy transposing of “have” with “of” on my Southern upbringing. 🙂
Let me just say this. I have no love for Romney. I didn’t like him when he was governor or Massachusetts. But I have no respect for that man currently occupying the White House. That being said, you really need to do a better job of checking your facts. 1) A “point” when talking percentages is a full number. Not a tenth. Anyone who has had a mortgage can tell you that. 2) Citizens Financial Group is actually a Bank based in Providence, Rhode Island. Not in Massachusetts. 3) Long prior to Romney’s becoming governor, it was called Citizen’s Bank. I know because I banked with them.4) “It strikes me as very odd” that you fail to mention that the jobs program that CFG approached Romney with in November 2004 was exactly the same program CFG was already running in conjuction with the State of Pennsylvania. 5) There was nothing Romney could do about a private sector merger of Proctor & Gamble with Gillette. That falls to the SEC to stop it and even then, they are restricted as to what they can do.6) From the same article, you claim that the merger cost Massachusetts 4,000 jobs. That is false. Here is what the article said: “In Boston, where about 4,000 Gillette employees work, the losses are expected to be widespread among executive ranks, though blue-collar jobs at Gillette’s facility in South Boston are unlikely to be affected in the short run.” So, they were actually clearing out the duplicate middle and upper management. Maybe a few hundred jobs. Not the 4,000 you claim. In fact, upon further searching, it turns out that there were only 4,208 Gillette Employees in the State of Massachusetts at the time of the merger. There were 1600+ hourly employees at the South Boston Plant. 1100 white collar workers at the Corporate HQ, about 1000 at an R&D Facility in Newton and the rest were either in Andover or working at Devens.. 7) Massachusetts has ALWAYS been a Democrat heavy state so it is no surprise that Romney’s “popularity” went down during his tenure. 8) You do realize that “public sector” jobs are not just those of the State Government, yes? They also include federal, county, city and town jobs. And they include things like teachers and state troopers and TSA agents. You might remember that Logan Airport has typically been one of the higher priority airports in terms of rolling out security measures, for good reason. On a separate note, I have to say that you make an awful attempt to try and tie together the Insider trading arrests from the CFG buyout (which is different than a merger) of Charter One Bank to Mitt Romney. You lose all credibility when you don’t bother to check facts.
DB,
Thanks for your feedback, but I must respond.
While I agree on the “full point” vs “a tenth” rise in unemployment should be referred to as such, that isn’t the popular nomenclature. Since UE rarely (if ever) rises/falls by a full point, tenth of a point changes are regularly referred to as “points”, not “tenths”. I used the more common term even thought I too disagree with it.
On the location of CFG, while is was “incorporated” in Providence, the bank itself is located in Boston. More corporations choose to incorporate in RI than any other state because of the ease of application and the corporate tax rate there is the lowest in the nation.
As you note, Citizens Bank did indeed exist before the merger. I never said it didn’t. But CFG did indeed merge with them to greatly increase their assets.
I’m not sure what you find “odd” about my not mentioning the inclusion of Pennsylvania in their “jobs program”. It is entirely possible they were running the same scam there as well. That doesn’t invalidate the premise that they saw an opportunity to do the same in MA in hopes of currying favor with the governor of a state where they were about to be charged with fraud.
On the P&G merger, critics disagree there was “nothing he could of done to stop it”. Check the links.
On those “4,000 jobs”, I did not find exact figures on the final number phased out, though the “4,000” figure appears frequently. If it is in error, I encourage you to provide the exact figure rather than surmise “maybe a few hundred”. As I note throughout the blog, I am a one man non-profit enterprise with limited resources. If you wish to volunteer as “fact checker”, I encourage you to apply.
As for Romney’s popularity, they ELECTED him in the first place (assumedly with greater than 50% of the vote), so arguing that “it is no surprise his poll numbers went down” because MA is a blue state, doesn’t apply. If he had done a good job, his poll numbers should have remained close to his election-day numbers, not plunge to just 34%.
Re: Tying in the “insider trading” scandal, I am a strong believer in the “where there’s smoke, there’s fire” philosophy. As any prosecutor will tell you, when charging a suspect with a crime, look for motive. Who at CFG leaked the information? Were they ever charged? I found no info on that, and encouraged “further investigation”.
Re: “Public Sector” hiring, I refer you to my post on the subject two weeks ago where I covered the issue in detail.
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