Booker, Bain, Bull

Cory Booker, mayor of Newark, New Jersey, and high-profile surrogate for the Obama campaign, opened his mouth on Sunday’s Meet the Press and showed why he’s not quite ready for national prime time.

Although he has since crawdadded on his comments, Booker said the following about the Obama campaign’s strategy of highlighting Mitt Romney’s career at Bain Capital:

This kind of stuff is nauseating to me on both sides. It’s nauseating to the American public. Enough is enough. Stop attacking private equity. Stop attacking Jeremiah Wright.

Of firms like Bain Capital, Booker offered this:

As far as that stuff, I have to just say from a very personal level I’m not about to sit here and indict private equity…To me, it’s just we’re getting to a ridiculous point in America. Especially that I know I live in a state where pension funds, unions and other people invest in companies like Bain Capital. If you look at the totality of Bain Capital’s record, they’ve done a lot to support businesses [and] to grow businesses. And this, to me, I’m very uncomfortable with.

Hmm. Let’s, uh, gently, parse his nauseating discomfort.

First, there is no comparison between Romney’s job as honcho of Bain Capital and Barack Obama relationship with Jeremiah Wright. That’s just a dumb way to frame the two issues, but it does sound good to those who buy into the “both sides do it” bullshit.

And, by the way, that stuff sounds like it was hatched inside the polyped bowels of the Romney campaign, which is still smarting from vicious attacks on Romney’s Bain days from fellow Republicans Newt Gingrich and Rick Perry.

Second, the Obama campaign has not indicted “private equity” per se. What it has done is point out some of the job-killing in Bain’s biography. Is that not fair? If Mittens runs on his business savvy, on his job-creator pedigree, is it not fair to mention he has some skeletons—skeletons that used to have jobs and pensions—in his closet?

Third, just because “pension funds, unions, and other people” invest in something doesn’t make it right, does it? I mean if that were true, Nelson Mandela would still be in prison in South Africa and not enjoying retirement as the country’s former president.

“Pension funds, unions, and other people” were at one time invested in various enterprises in that authoritarian apartheid state, and the racist regime’s fall was largely due to a widespread disinvestment campaign that strongly urged “pension funds, unions, and other people” to stop doing business with the racists.

Finally, let’s get to the heart of the issue. Bob Drogin, a big-time reporter for the Los Angeles Times, wrote a story—way back in ancient times, December of 2007—in which he said:

From 1984 until 1999, Romney led Bain Capital, a Boston-based private equity group that earned jaw-dropping profits through leveraged buyouts, debt hedge funds, offshore tax havens and other financial strategies. In some cases, Romney’s team closed U.S. factories, causing hundreds of layoffs, or pocketed huge fees shortly before companies collapsed.

Closing factories and laying off workers—is that what Cory Booker means by extolling the virtues of “private equity”? Huh?

Drogin also quoted a former managing director at Bain Capital, Marc B. Wolpow:

They’re whitewashing his career now. We had a scheme where the rich got richer. I did it, and I feel good about it. But I’m not planning to run for office.

The old rich get richer scheme—is that what Cory Booker means by “stop attacking private equity”? Huh?

Amy Goodman of Democracy Now! asked Bob Drogin to “lay out Mitt Romney’s business background.” I will quote Drogin at length just to show how dumb (however self-serving they may be) Cory Booker’s original statements were:

…the first thing is, it’s not an investment firm, as someone just said. An investment firm is something where you make an investment. It’s a buyout firm. In 1984, he was tapped to set up a — what began as a venture capital spin-off of a management consulting firm in Boston called Bain & Company. And Bain Capital began with these small investments in what were then startup companies, but very quickly, within a year or two, it became what’s known as a leveraged buyout company. They would put up a million dollars or so and borrow ten or twenty or fifty more and buy into troubled companies and then strip assets and lay off workers and close factories and do whatever they needed to do, charge enormous fees and sell it as quickly as possible.

Over the years, by the time he took a leave of absence in 1999, they had bought and sold more than a hundred companies. And it’s a little difficult to figure out how many jobs were lost or how many jobs were created, and I’m sure that overall there was probably a net gain in jobs in that period, but there are a number of cases that I was able to track where they did close companies, close factories, where they made staggering profits in the hundreds of millions of dollars, shortly before companies crashed off into bankruptcy.

You know, this was the so-called decade of greed, and these were guys who were very much in the model of the Gordon Gekko. I mean, these were — and it’s not illegal, it’s not improper; it’s — you know, it’s the way the system works. They went in, they bought up troubled companies. In some cases, they made them better; in some cases, they just, you know, shredded them and took the money and ran. So, that’s the broad background.

And that is why Cory Booker—who is somewhat compromised by his relationship with Wall Street—was wrong to go on Meet the Press and say dumb  and dumbfounding things like, “Stop attacking private equity,” and, “This kind of stuff is nauseating to me on both sides.”

His gastrointestinal distress should come as he contemplates the trickle-down damage that a Mitt Romney presidency can do to folks who aren’t living the life of Gordon Gekko.

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  1. ansonburlingame

     /  May 21, 2012

    Econo 101 suggests that the ultimate goal of any business in a capitalistic society is to legally make a profit. Job creation, per se is NOT the purpose, primarily of any business If in fact job creation was the primary goal then there would be zero profit. All the profit would be used to pay additional workers for simply job creation, whether they produce anything worhtwhile or not.

    Profit from any business does not mean money is stuffed into lmattresses. Instead it flows back into the economy, thru various stockholder benefits (including pension funds, etc.) and is “spent” on products or reinvested back into other businesses, providing capital to continue to grow.

    Private equity should not be a dirty word, expect in a communist society. Private equity (money) is provided to start or grow a business. It is NOT primarily used simply to creat jobs. See above, again. However in most cases business growth means additional jobs in fact are created.

    Sometimes private equity is used for a purpose called a leveraged buyout. Now what does that mean? It means that private equity is invested in an amount that then allows lenders to loan more money, with some risk involved in such lending. So a leveraged buyout itself seems OK to me, morally or ethically.

    It is what is then done with the company AFTER new owners gain control that becomes an issue.

    For sure I do not understand all the nuances of what happens or why it happens after new ownership is established througn private equity investment alone or leveraged buyouts. But I do know again that the purpose of those new owners is to make a profit, not just create jobs. Obviously the old owners failed in that effort or they would not have sold the company to new owners.

    My guess is that in those cases where a company is “picked clean” by new ownership simply means that the assests (land, buildings, equiptment, inventory of products, etc.) is far more valuable than the continued production of a product or service that was not selling very good under old ownership.

    Now take all of the above events as a whole and tell me which one should be illegal or is unethical but still legal?

    In essence what progressives are doing with Bain is looking only at the picked clean part of the overall process and focusing only on jobs lost as a result. In doing so of course you miss the larger part of the process in terms of total NEW jobs created as a result of insertion of private equity. A few companies were picked clean but a LOT of companies were reorganized, new and better jobs were created and the end result over all was more jobs, more business growth and yes, more profits for lots of folks including those only being paid wages as well as a broad range of investors such as maybe your own pension fund or health care fund, etc.



  2. Sedate Me

     /  May 21, 2012

    What? Something from Newark is not ready for prime-time???

    And who is Cory Booker working for again? Is he trying to land a gig at Bain after Romney wins?


  3. im just saying

     /  May 28, 2012

    One of the primary reasons Romney, Bain et al. can make these huge sums is the change in the tax code to tax capital gains at only 15%. Romney would not be nearly as rich as he is without this.


    • A great point, which hopefully the Democrats will make again and again this summer and fall. And let’s don’t forget that Romney is still making money from his “work” at Bain.



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