Will Bain become Romney's bane?
With Florida's Republican primary just weeks away, frontrunner Mitt Romney's taking plenty of heat from competing GOP candidates and others over acquiring a personal fortune while at Bain, a private equity firm he co-founded.
The flap's not just about his reaping hundreds of millions of dollars — extreme sums many might find offensive — derived from Bain's mercenary corporate formula. By buying fatigued businesses (usually with borrowed money), stripping away their costs (including cutting jobs) and repackaging them for future sale, Bain has hit the leveraged buyout lottery for many years.
But while Bain profits, some of the anointed companies end up in bankruptcy.
Bain naysayers argue that's neither capitalism nor a tradition of building jobs for the future.
Bain proponents say the firm specializes in Darwinian capitalism in the raw. Can't compete? Get out of the way or get run over. That, they warn, is what rising global competition has in store for the United States in the coming decades.
I can almost hear Ayn Rand shout "Hallelujah" from the cosmic rafters.
In Wall Street parlance, Romney's a master of the universe. But as someone seeking the U.S. presidency, he's walking on eggshells.
Bain Capital is very good at finding wheezing companies and slicing off what's not healthy. It has got the clout to inject capital and hire no-nonsense managers. Bain is exceptional at taking those refreshed companies public or selling them to others.
That doesn't make Bain especially popular. And it raises doubts about Romney.
To many Americans who don't have millions in their personal bank accounts, who did not get advanced business and law degrees from Harvard, who did not grow up as an American elite as the son of auto mogul and Michigan Gov. George Romney, what Bain Capital really does is prey on the weak and poor.
That infamy is now being reinforced by King of Bain: When Mitt Romney Came To Town. The anti-Romney video started appearing in ads last week, courtesy of new funding from a pro-Newt Gingrich super PAC.
The 29-minute so-called documentary profiles four companies, including one in Florida, all supposedly stripped and sold by Romney's Bain Capital, leaving many out of work and little if anything of value behind.
Critics of the video liken it to the Swiftboat attacks on presidential candidate John Kerry in 2004.
The Florida business, UniMac, was a commercial laundry-equipment factory that was eventually shuttered. While the documentary says 830 workers in three states lost their jobs, other news reports dispute those claims.
The documentary features three other companies: KB Toys, an Indiana-based office-supply firm called AmPad, and an electronics company called DDI.
By Friday, Gingrich was calling on the PAC behind the documentary to edit it for accuracy or stop running it.
Bain may practice clever, profitable capitalism, but it's not very presidential. It may have catapulted Romney well into the 1 percent. But to the 99 percent, it all smacks of self-enrichment.
To be fair, Bain Capital's not alone. Other private equity firms mimic Bain's takeover strategy.
And Romney's stratospheric wealth, estimated at somewhere near a quarter-billion dollars, isn't considered all that rare these days.
Just last week, we learned the three founders of a private equity company called the Carlyle Group together earned more than $400 million last year.
Both firms operate right here among us.
Only a year ago, a Tampa communications business called Syniverse was taken private in a $2.5 billion buyout by the Carlyle Group. Bain Capital was among a small group of private equity firms that took private the Tampa parent of restaurant chains Outback Steakhouse, Carrabba's, Bonefish and others.
At some point, OSI Restaurant Partners and Syniverse will be taken public again, sold off or possibly dismantled if their pieces can be sold for more than the whole. That is, after all, what private equity firms do.
Critics in Romney's past campaigns, including runs for the U.S. Senate and Massachusetts governor, also ripped Romney for his predatory tactics at Bain Capital. So Romney's had plenty of time to come up with answers to such complaints.
This time, though, could be different. Nobody talked much about the "1 percent" super-rich in those earlier campaigns. The Occupy Wall Street movement coming in force to the Republican National Convention in Tampa this summer did not exist back then.
This time, Romney may find he has more explaining to do about Bain Capital.
Robert Trigaux can be reached at [email protected]