2016 Postmortem

BridgeTheGap

(3,615 posts) Thu Oct 18, 2012, 12:14 PM Oct 2012

Mitt Romney's Bailout Bonanza

Mitt Romney’s opposition to the auto bailout has haunted him on the campaign trail, especially in Rust Belt states like Ohio. There, in September, the Obama campaign launched television ads blasting Romney’s November 2008 New York Times op-ed, “Let Detroit Go Bankrupt.” But Romney has done a good job of concealing, until now, the fact that he and his wife, Ann, personally gained at least $15.3 million from the bailout—and a few of Romney’s most important Wall Street donors made more than $4 billion. Their gains, and the Romneys’, were astronomical—more than 3,000 percent on their investment.

It all starts with Delphi Automotive, a former General Motors subsidiary whose auto parts remain essential to GM’s production lines. No bailout of GM—or Chrysler, for that matter—could have been successful without saving Delphi. So, in addition to making massive loans to automakers in 2009, the federal government sent, directly or indirectly, more than $12.9 billion to Delphi—and to the hedge funds that had gained control over it.

One of the hedge funds profiting from that bailout— $1.28 billion so far—is Elliott Management, directed by  Paul Singer. According to The Wall Street Journal, Singer has given more to support GOP candidates—$2.3 million—than anyone else on Wall Street this election season. His personal giving is matched by that of his colleagues at Elliott; collectively, they have donated $3.4 million to help elect Republicans this season, while giving only $1,650 to Democrats. And Singer is influential with the GOP presidential candidate; he’s not only an informal adviser but, according to the Journal, his support was critical in helping push Representative Paul Ryan onto the ticket.

http://www.thenation.com/article/170644/mitt-romneys-bailout-bonanza#

7 replies

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Highlight:

Mitt Romney's Bailout Bonanza (Original Post) BridgeTheGap Oct 2012 OP

This is why he won't show his 2009 tax return JSK Oct 2012 #1

I have always figured Romney's anger at the bailout is that he could not harvest from bankruptcy. gordianot Oct 2012 #2

I am not really sure this is a positive story for exboyfil Oct 2012 #3

Did you read the article? JSK Oct 2012 #4

I read it exboyfil Oct 2012 #5

And that ain't the only bailout Mittens has profited from: beac Oct 2012 #6

Penance and victory for Romney exboyfil Oct 2012 #7

JSK

(1,123 posts)

1. This is why he won't show his 2009 tax return

Reply to BridgeTheGap (Original post)

Thu Oct 18, 2012, 12:19 PM

Oct 2012

Spread this story far and wide.

gordianot

(15,238 posts)

2. I have always figured Romney's anger at the bailout is that he could not harvest from bankruptcy.

Reply to BridgeTheGap (Original post)

Thu Oct 18, 2012, 12:25 PM

Oct 2012

His blind trust is mostly invested in a company that he created, he so wanted real bankruptcy and the bargain prices for his guides to pick up. If elected President I am sure there will be many new opportunities for him and his sons. The vultures are circling getting ready to land.

exboyfil

(17,863 posts)

3. I am not really sure this is a positive story for

Reply to BridgeTheGap (Original post)

Thu Oct 18, 2012, 12:49 PM

Oct 2012

the bail out. The equity and debt holders of GM were esentially wiped out (the debt holders in violation of their covenant agreements - the stock holders got what they should expect). This story says equity holders in the supply chain benefitted massively from the bail out. This means the bail out was not structured properly. Could not the debt holders of GM been better protected than the equity holders in the supply chain? This seems very unfair.

JSK

(1,123 posts)

4. Did you read the article?

Reply to exboyfil (Reply #3)

Thu Oct 18, 2012, 01:00 PM

Oct 2012

The Hedge Fund (that Mitt and his donors own) that owned Delphi basically held GM and the whole deal hostage until they got the agreement they wanted.

exboyfil

(17,863 posts)

5. I read it

Reply to JSK (Reply #4)

Thu Oct 18, 2012, 01:34 PM

Oct 2012

and you are right about the greed is breathtaking to behold. The problem is that, whether Obama could have done anything at all about it, they got rolled by these vultures. Could the government (or GM management) have gone to court because Delphi would have been in violaton of its supplier contracts with GM? I think I will read this book - it does sound fascinating and a lesson in how not to structure an industry.

I probably should know the laws better. I used to work as an account manager, and we would never have considered not meeting our commitments to the best of our ability. I might go talk to one of our buyers about what we would do if threatened to be shut down. We usually have contingency plans in place, but our industry has far more flexibility than GM. It is a lesson in vertical integration and/or a two source sourcing strategy.

beac

(9,992 posts)

6. And that ain't the only bailout Mittens has profited from:

Reply to BridgeTheGap (Original post)

Thu Oct 18, 2012, 01:47 PM

Oct 2012

Mitt Romney likes to say he won't "apologize" for his success in business. But what he never says is "thank you" – to the American people – for the federal bailout of Bain & Company that made so much of his outsize wealth possible.

According to the candidate's mythology, Romney took leave of his duties at the private equity firm Bain Capital in 1990 and rode in on a white horse to lead a swift restructuring of Bain & Company, preventing the collapse of the consulting firm where his career began. When The Boston Globe reported on the rescue at the time of his Senate run against Ted Kennedy, campaign aides spun Romney as the wizard behind a "long-shot miracle," bragging that he had "saved bank depositors all over the country $30 million when he saved Bain & Company."

In fact, government documents on the bailout obtained by Rolling Stone show that the legend crafted by Romney is basically a lie. The federal records, obtained under the Freedom of Information Act, reveal that Romney's initial rescue attempt at Bain & Company was actually a disaster – leaving the firm so financially strapped that it had "no value as a going concern." Even worse, the federal bailout ultimately engineered by Romney screwed the FDIC – the bank insurance system backed by taxpayers – out of at least $10 million. And in an added insult, Romney rewarded top executives at Bain with hefty bonuses at the very moment that he was demanding his handout from the feds.

Read more: http://www.rollingstone.com/politics/news/the-federal-bailout-that-saved-mitt-romney-20120829#ixzz29fq43CPm

exboyfil

(17,863 posts)

7. Penance and victory for Romney

Reply to beac (Reply #6)

Thu Oct 18, 2012, 02:04 PM

Oct 2012

This shows Romney's linear thinking and how he is primarily motivated by greed (or power symbolized by wealth). This whole situation could have gotten him into the Presidency and here is how:

Just because he was one of the many investors who bought up distressed Delphi does not make him a bad guy. It does not appear he had nearly enough invested to be one of the controlling owners. To this point it is just an investment like any other. He could have even spinned that part positively (if no one invested then the collapse of Delphi would have occurred earlier).

Once he found out about how the Delphi management operated in negotiations, he should have disavowed it (he could have even waited until the stock went public).

At the point that he should have known (the Rattner book for example) then he should have made a wide public pronouncement as to why bail outs are bad (profiting vultures) and given all of his gains to the U.S. Treasury as penance.

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