With the New Hampshire Republican primary today and the rhetoric reaching extreme levels in the last 48 hours, one cannot avoid the headlines and opposition screaming about Mitt Romney’s “Wall Street Connection”. As though it were a disease which Mr. Romney must prove is not contagious.
One famous Shakespearean line comes to mind, “This above all: to thine ownself be true…”
Mitt, we think, is being bated into a trap and trying to answer the “And when did you stop beating your spouse?” question with his constant protests that he “really did not actually work on Wall Street.”
Come on now, what the heck is going on here?
Let’s start with a review of the facts as are generally in the public record as to Mr. Romney’s biography and record.
Son of George Romney, former Michigan Governor and prominent national political figure. Mormon. Educated at BYU and earned joint degree from Harvard Business and Law. Worked at the prestigious Bain Consulting, where he rose to CEO. Co-founded spinoff company, investment and private equity firm Bain Capital in 1984, which by all accounts has been extremely successful. Ran for Mass. Senate seat in 1994, when he lost to incumbent Ted Kennedy. Successfully ran the 2002 Olympic Winter Games in Salt Lake City. Elected Governor of Mass. in 2002. Decided not to run for second term and ran for 2008 Republican Pres. Nomination, which he lost to Sen. John McCain. Announced his run for this Pres. cycle in June, 2011.
Very impressive, no?
So, let’s look at what some of his current Republican opponents are saying about Mitt and his business record, especially at Bain Capital.
“They’re vultures that are sitting out there on the tree limb, waiting for the company to get sick, and then they sweep in, they eat the carcass, they leave with that, and they leave the skeleton.” --Texas Governor Rick Perry, in criticizing private equity firms like Bain Capital
"I feel that is the man that destroyed us. That hurt so bad to lose my home because of one man that's got 15 homes." --excerpt from Super-PAC “Winning the Future” ad campaign
"He owes us a report on his stewardship of Bain Capital”, Georgia Republican Newt Gingrich on the "Today" show, demanding that Romney tell the public more about how he operated as a venture capitalist. “Mitt has constantly made money while leaving behind people who are much poorer, especially the workers.” (Of course Newt fails to mention his own connection with LBO firm Forstmann Little)
“Gov. Romney enjoys firing people. I enjoy hiring them.” --Jon Huntsman
We could go on but you get the idea.
Mr. Romney has been providing fodder in certain recent comments, most recently in the Republican debate. Recalling something his father had told him, Romney said, “He had good advice to me. He said, ‘Mitt, never get involved in politics if you have to win an election to pay a mortgage.” This is being wildly and widely spun as Romney saying “Only rich people should run for office.”
And then there was the comment, “I like being able to fire people…”, which was taken entirely out of context and was actually referring to choice in health insurance and not doing business with a service provider who does not provide good service.
Business Insider and some others had an interesting take on why this was a gaffe nonetheless:
"Because saying 'I like being able to fire people' is something that nobody would ever use in this context, unless they're someone for whom firing people (restructuring, right-sizing, etc.) is their modus operandi, which applies to a Private Equity guy. Romney's line about firing insurance companies revealed that he doesn't experience interacting with these companies the way most Americans do. He's not below the corporate power structure, he's above it. Which means, by extension, that he's above us. For a guy trying to combat his image as a predatory capitalist, that's not the message he wants to send. “
But although we think Romney is being unfairly portrayed by many of the spinmeisters, we also think that on the Wall Street question, he is just hurting himself with “denials”.
"I'm independent of Wall Street," Romney told Bloomberg Television's Peter Cook in an interview. "By the way, I haven't ever worked on Wall Street. They were service providers to the business I was in. I was not in a Wall Street firm, although I was in financial services broadly."
Who are we kidding and why does it actually matter to the point where Romney feels he must deny the connection? Is there something inherently wrong with being an extremely successful business person who helped turned around struggling companies, to put the most positive spin on it. According to sources, Domino’s, Staples, Burlington Coat, and The Weather Channel are among Bain’s success stories.
Detractors will say many private equity firms destroy shareholder value, create unnecessary layoffs and plant the seeds for long-term failure by selling valuable assets and not making capital investments for the future. And we are sure this is the case in many instances. Take a look at Sears Holdings and K-Mart under fund manager Eddie Lambert.
We do not have the time and space to debate the merits of private equity firms here nor evaluate whether their net societal impact is a positive or a negative. Our point simply is if Mr. Romney is proud of his business accomplishments, go out and defend them, don’t run from them.
And it appears he might just be starting to do that with an appearance on CNBC being promoted for tomorrow, Wednesday morning, Jan. 11 at 7:45 am. Might just be worth a look.
Good Trading!
David W. (aka The Underground Trader)
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I shared this piece with a "liberal" independent friend of mine who is quite the political buff and he sent me a link to liberal blog "Think Progress" for their take on Mitt Romney's business record at Bain Capital, titled "Mitt Romney, Job Killer" in the interest of both sides of the story, here is a quick excerpt (although I am really not taking sides here and not endorsing Mr. Romney or anyone else) The Romney Record at Bain: Bankruptcies, Bailouts, & Mass Layoffs Romney and his team maximized returns by firing workers, seeking government subsidies, and flipping companies quickly for large profits. Sometimes Bain investors gained even when companies slid into bankruptcy. Romney himself became wealthy at Bain. He is now worth between $190 million and $250 million, much of it derived from his time running the investment firm, his campaign staffers have said. Bain managers said their mission was clear. “I never thought of what I do for a living as job creation,” said Marc B. Walpow, a former managing partner at Bain who worked closely with Romney for nine years before forming his own firm. “The primary goal of private equity is to create wealth for your investors.” Romney’s Bain Capital Caused Mass Layoffs, Sent Jobs Overseas Thousands of Americans were laid off by Bain Capital at companies it purchased, managed, and, at least a quarter of the time, drove into bankruptcy etc. etc.