[UPDATED with Santa Ana Hypocrisy?] "Bain" of Mitt Romney's Existence: Shitty Stewardship of Anaheim Company
UPDATE, JAN. 13, 10:42 A.M.: Even those who question Mitt Romney's commitment to conservatism would agree that, when it comes to business, he has steadfastly advocated in public speeches that government must get out of the way so they can flourish.
But now, a second Orange County connection to Romney's reign at the equity firm Bain Capital reveals the GOP presidential front-runner may be a hypocrite: In 1997, Bain and other investors decided to move their company GT Bicycles into Santa Ana's enterprise zone, which rewards businesses that relocate and hire new workers with generous tax credits aimed at revitalizing urban areas. It's been estimated that enterprise zones cost California taxpayers alone $70 million annually.
Effectively suckling at the taxpayer teat is probably not the image Romney hopes springs to mind when he touts himself as a "proven job creator," although having done so with government assistance would at least still be accurate.
And make no mistake, this was not an isolated incident, as Clawback ("a blog of Good Jobs First") points out in its laundry list of companies acquired and managed by Bain during Romney's tenure that showed no hesitation in taking taxpayer handouts in the form of state and local economic development subsidies. Even after he left Bain, Romney arranged to receive profits from these companies helped by taxpayers, Clawback notes.
Which makes one wonder if Romney sniffed his hair gel before channeling Ronald Reagan to say during his New Hampshire victory speech that "the path I lay out is not one paved with ever increasing government checks and cradle-to-grave assurances that government will always be the answer."
Unless it makes good business sense, of course.
ORIGINAL POST, JAN. 11, 10:32 A.M.: Mitt Romney went two-for-two by winning the New Hampshire primary last night, but his GOP rivals exposed a major chink in his armor: numerous firings, bankruptcies, mass layoffs and outsourcing of positions during his 15-year stewardship of equity firm Bain Capital. Now following the front-runner to South Carolina, courtesy of Newt Gingrich: Under Romney, Bain "looted" circuit board maker DDi before dispensing with the Anaheim company at a hefty 200 percent profit. In your grandfather's Grand Old Party, such business moves had tumblers clinking at country clubs. But in today's Repopulist Party, which attracts angry white guys slipping out of the middle class, those maneuvers are not indicative of a "proven job creator."
For a keen overview of Bain's gutting of DDi under Romney, check out Marty Wisckol's primer in the Orange County Register. Here's a cheat sheet: Bain nearly quadrupled the money its investors put into DDi starting in 1996, turning a $41 million investment into $157 million of value within a few years. Romney's firm took the DDi stock public in 2000 and eventually liquidated most of its stake in the company, selling shares to the public as well as distributing them to its investors and partners. It generated at least $93 million from selling the stock.
Another Great American success story right? Well, it was for investors like Romney, who cashed out $4.3 million of his DDi stock in May 2001. But by the end of 2002, after the tech bubble had burst, DDi defaulted on debt and cut its workforce by 1,300 workers, to about 1,900. The following year would be "highlighted" by a Chapter 11 bankruptcy filing, the SEC citing Lehman Brothers for pressuring analysts to lie about DDi's worth, and shareholders suing DDi for withholding negative information. (The company settled for $4.4 million.)
As Wisckol reports, DDi was the worst performing public company in 2005, losing 79 percent of its stock value. The company remains open, still employing about 1,600 workers, but the wreckage left by Bain and Romney plays right into the hands of foes like Gingrich.
"I think there's a real difference between people who believed in the free market," he told the Washington Post, "and people who go around, take financial advantage, loot companies, leave behind broken families, broken towns, people on unemployment."
Barack Obama couldn't have said it better.
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