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Why Romney's Bain Questions Matter

Eugene Robinson
May 25, 2012


Who are the dastardly enemies of free enterprise, who decided to make an issue of Mitt Romney's tenure at the private-equity firm Bain Capital?
Eh, those would be his fellow Republicans.

Listen to what Newt Gingrich said in January:
"The Bain model is to go in at a very low price, borrow an immense amount of money, pay Bain an immense amount of money, and [then] leave. I'll let you decide if that's really good capitalism."

Or what Rick Perry said the same month:
I happen to think that that is indefensible."

When Democrats say things like that, they're accused of being Bolsheviks who want to destroy capitalism.
But even in the context of the GOP primary battle, where "moderate" was the ultimate epithet, Romney's actions at Bain were sen as
raising a legitimate and important question: 'Shouldn't free markets serve the American people, rather than the other way around?"

President Obama is right to raise this issue now.
I wish he had done so during the debate on financial regulatory reform -- only now is he posing the kind of fundamental questions that needed to be asked -- but better late than never.

There's nothing inherently wrong with private equity, which plays an important role in the economy.
And, of course, there's nothing wrong with wealth; those who risk their capital in private-equity ventures should be rewarded when those efforts pay off.
No one begrudges Romney his off-shore investment accounts, his mansions or his wife's Cadillacs.

Some kinds of dealings are prohibited or even criminalized -- insider trading, for example, because of the way it benefits a select few at the expense of other investors.

It is reasonable to ask whether some highly leveraged buyout deals of the kind that Bain and other private-equity firms often conduct,
should fall into the same thimb-on-the-scale category as insider trading?

Suppose a company is failing and appears beyond rescue
Suppose a private-equity firm buys the company with borrowed money, burdens it with more debt, and then spends the next few years firing workers, selling assets, eliminating pension plans -- all the while collecting handsome "management fees."

What higher economic purpose has been served?
Why is this not what Perry memorably called "vulture capitalism"?

Look at the mounting losses as the nation's largest and supposedly best-run bank, JP Morgan Chase -- at least $2 billion and perhaps much more.

The idea was to balance the bets so that if the bank's predictions were right it would make a lot of money, and if the predictions were wrong it would lose money, but not so much.

Then the bank's luck turned south, and Chairman Jamie Dimon discovered that the betting positions were unbalanced.
Instead of losing a little money, the bank was set up to lose a lot.
Sharp-eyed traders at hedge funds noticed what was happening and jumped in to take advantage of big traders on the skids.

That's a classic Las Vegas story, but why should it be a Wall Street story?
Should a bank whose deposits are federally insured -- a bank big enough to crash the financial system -- be standing at a craps table in the middle of the night yelling "Baby needs a new pair of shoes"?

This is what Rick Santorum said in March: "I heard Governor Romney here called me an economic lightweight because I wasn't a Wall Street financier like he was. Do you really believe this country wants to elect a Wall Street financier as the president of the United States? Do you think that's the kind of experience we need? Someone who's going to take and look after, as he did, his friends on Wall Street and bail them out at the expense of Main Street America?"

Good question. I'd like to hear Romney's answer.

goodogstay goodogstay 46-50, M 4 Responses May 28, 2012

Your Response


You would think the heads of these GOP candidates turned Romney supporters would just fall of from all the spinning they do. And I don't just mean spinning the issues, I mean spinning to a completely opposite position. They really don't seem to worry about the fact that their previously stated position on Romney and Bain is TAPED, visible to all. Are they right about the American electorate when they take this chance? Will people just ignore what they said two months ago and go with the new narrative lauding Bain Capital?

As i keep saying, the only people that keep saying that Obama bringing up Bain is backfiring on Obama, is the TV pundits and the GOP faithful. To every other American, it does matter and is certainly relevant to the campaign. Off shore accounts? Sure, they are relevant because if a person believes in the US, then all of their money and support should be in the US. Next week, off-shore accounts won't matter either to the same TV pundits and GOP Kool Aid drinkers.

Very well expressed. There is a very big difference between Wall Street and the super rich having a healthy economy and the mass of Americans having a healthy economy.

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Four more years for Obama. And Warner for Senator of Massachusettes