Rolling Stone AGAIN! Federal Bailout That Saved Mitt Romney

[Wild Cobra]

2nd posting:

The FDIC bailed out Gecko. PERIOD

Like the FED, created by bankers!, as the lender of last resort to banks, FDIC is a key part of the Repug-hated, too-big-govt, was an innovation by the VRWC-hated FDR in the 1930s to restore confidence in the hated banks after the UNregulated financial sector went belly up in the 1929 bubble burst (which btw was made MUCH WORSE by the VRWC-adored Repug businessman Herbert Hoover).

The financial-sector-hated FDIC is funded by the financial sector, but the FDIC itself really IS BACKED BY TAXPAYERS.

FDIC nearly ran out of funds taking over, bailing out banks during the Banksters' Great Depression. FDIC is so hated the that the financial sector got rid of/harrassed/trashed Sheila Bair because she wanted MORE contributions from the financial sector to protect taxpayers' exposure to the financial sectors repeated, inevitable crises.

The NYMAG article does nothing change the fact that

The FDIC bailed out Gecko. PERIOD

Can you at least spell Gekko correctly?

[boutons_deux]

Another example of how PE scams the country with tax avoidance and tax evasion.


New York probes private equity tax strategy

At least a dozen U.S. private equity firms have been subpoenaed by the New York state attorney general as part of a probe into whether a widely used tax strategy that saved these firms hundreds of millions of dollars is proper,

the conversion of fees these private equity firms charge for managing investors' assets into fund investments

The practice is known as a "management fee waiver." As fund investments, the income would be taxed as capital gains, which attract rates around 15 percent. Without the conversion, the fees would be ordinary income, taxed at rates around 35 percent.

http://www.reuters.com/article/2012/...8800B620120902

[boutons_deux]

yes, and bankers paid the money the FDIC used to do so. taxpayers weren't on the hook for it.

tax payers are on the hook if the FDIC runs out of funds. The bankers incessantlhy about financing the FDIC, iow, they want taxpayers to finance it.

[boutons_deux]

Did the Bain bailout exceed the FDIC's reserves to the point tax payer dollars were used?

no, what Bain needed was peanuts compared to FDIC reserves. but just like taxpayers bailed out insurnace company AIG, they would bail out a underfunded FDIC.

And FDIC is still a GOVT AGENCY that bailed failed Gecko out.

BIG GOVT for the 1%, small govt for the 99%.

[boutons_deux]

Can you at least spell Gekko correctly?

, can you a least get slapped like pussy?

http://en.wikipedia.org/wiki/Gecko

[Wild Cobra]

, can you a least get slapped like pussy?

http://en.wikipedia.org/wiki/Gecko

Dumb :

Gordon Gekko

[boutons_deux]

so the movie mispelled it, artistic licence,

[Wild Cobra]

so the movie mispelled it, artistic licence,

Are you referring to the lizard, or the fictional man?

Mispelled?

Gekko Family History and Genealogy

Gekko Family Tree

Elaine Gekko (1930 - 2004) Portland, Multnomah County, OR (Oregon), 97230
Sam Gekko (1930 - 2004) Gardena, Los Angeles County, CA (California), 90247
Ryokichi Gekko (1891 - 1981) Madera, Madera County, California (California), 93637
Harry Gekko (1921 - 2004) Portland, Multnomah County, OR (Oregon), 97230
Shizuye Gekko (1901 - 1995) Madera, Madera County, CA (California), 93637
Emy Y Gekko (1930 - 2011) Gardena, Los Angeles County, California (California), 90247

[Wild Cobra]

If you are saying they spelled the lizard wrong, think again:

Gekko Gecko

[boutons_deux]

3rd posting

The FDIC bailed out Gecko. PERIOD

Like the FED, created by bankers!, as the lender of last resort to banks, FDIC is a key part of the Repug-hated, too-big-govt, was an innovation by the VRWC-hated FDR in the 1930s to restore confidence in the hated banks after the UNregulated financial sector went belly up in the 1929 bubble burst (which btw was made MUCH WORSE by the VRWC-adored Repug businessman Herbert Hoover).

The financial-sector-hated FDIC is funded by the financial sector, but the FDIC itself really IS BACKED BY TAXPAYERS.

FDIC nearly ran out of funds taking over, bailing out banks during the Banksters' Great Depression. FDIC is so hated the that the financial sector got rid of/harrassed/trashed Sheila Bair because she wanted MORE contributions from the financial sector to protect taxpayers' exposure to the financial sectors repeated, inevitable crises.

The NYMAG article does nothing change the fact that the FDIC bailed out Gecko. PERIOD

[Wild Cobra]

3rd posting

The FDIC bailed out Gecko. PERIOD

Yes, I get it. What I don't get is all your posting in 20011 and prior spelled Gekko correctly. A gekko is still a lizard if that's your point. I point out the correct spelling, yet true to your hard-headed nature, you refuse to correct it.

[boutons_deux]

Taibbi inteview, same topic, more details, info

Matt Taibbi: The Secret to Mitt Romney’s Fortune? Greed, Debt and Forcing Others to Foot the Bill

AMY GOODMAN: This is Democracy Now!, democracynow.org. We are broadcasting from PBS station WEDU in Tampa, Florida. This is "Breaking With Convention: War, Peace and the Presidency," Democracy Now!'s special coverage from the Republican National Convention, inside and out. I'm Amy Goodman.

We continue our coverage now by turning to an issue that’s been raised repeatedly during the campaign: the personal wealth of Republican presidential nominee Mitt Romney. A new article by reporter Matt Taibbi in Rolling Stone sheds light on the origin of his fortune, revealing how Romney’s former firm, Bain Capital, used private equity to raise money to conduct corporate raids. Matt Taibbi writes, quote, "what most voters don’t know is the way Mitt Romney actually made his fortune: by borrowing vast sums of money that other people were forced to pay back. This is the plain, stark reality that has somehow eluded America’s top political journalists for two consecutive presidential campaigns: Mitt Romney is one of the greatest and most irresponsible debt creators of all time," Taibbi writes. He goes on to say, "In the past few decades, in fact, Romney has piled more debt onto more unsuspecting companies, written more gigantic checks that other people have to cover, than perhaps all but a handful of people on [planet] Earth."

Well, Matt Taibbi joins us now, contributing editor for Rolling Stone magazine. His most recent in-depth piece called "Greed and Debt: The True Story of Mitt Romney and Bain Capital," author of the book also, Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History.

Matt Taibbi, welcome to Democracy Now!

MATT TAIBBI: Good morning.

AMY GOODMAN: Lay it out for us. Excellent piece, investigative piece, on Mitt Romney’s wealth. Where did it start?

MATT TAIBBI: Well, you know, for me, it started when I had to cover this campaign earlier this year, and I was listening to Romney’s stump speech about debt. You know, he came up with this whole image of a prairie fire of debt raging across America that was literally going to burn children alive in the future. And I kept thinking to myself, does nobody know what this guy did for a living and how he made his money? You know, Mitt Romney is unabashedly a leverage buyout artist. And a leverage buyout artist is a guy who borrows lots of money that other companies have to pay back. And that’s the simple formula.

He started out—his most famous deals, of course, are essentially venture capital deals like the Staples situation, where he built a company from the ground up. But after Staples, he switched to a different model, that he preferred for the rest of his professional career, in which he took over existing companies by putting down small amounts of his own cash, borrowing the rest from—typically from a giant investment bank, taking over controlling stakes in companies, and then forcing those companies to pay him either through management fees or through dividends. And that’s his business formula.

AMY GOODMAN: Explain what private equity is.

MATT TAIBBI: Well, that is what a private equity fund does. They’re essentially—it’s a synonym for what in the '80s we called the leverage buyout business. It's a small group that raises capital and then goes and leverages takeovers of companies using borrowed money. In the '80s, these—this sort of business was glamorized through a couple of things, in particular, in pop culture. One was the movie Wall Street, where Gordon Gekko, the famous Michael Douglas character from the Oliver Stone movie, was essentially a private equity guy. He was a leverage buyout takeover artist. And the other one was a book called Barbarians at the Gate, which was a true story of the takeover of RJR Nabisco by a company called KKR, which was another Bain Capital-like takeover company. And that's what they are. They’re essentially guys who borrow money to take over companies and extract wealth from those companies to pay off their investors.

AMY GOODMAN: Matt, you say that Mitt Romney is not the flip-flopper that critics say he is.

MATT TAIBBI: Yeah. I mean, this is a sort of a subtle point about Mitt Romney. It’s funny. I don’t want to stretch this comparison too much, but, you know, there’s—it’s almost like he has a kind of a religious conviction about being able to lie to people outside of the tent, so to speak. You know, there’s that tenet of some forms of extreme Muslim religions where it’s OK to lie to the infidel. And I think Mitt Romney has a little bit of that. He seems to believe that it’s OK, that there’s nothing particularly wrong with changing one’s mind about things, and he does it repeatedly in a way that I think is different from other politicians. For him, it’s just changing a business strategy, and he doesn’t see why everybody should get so upset about it.

AMY GOODMAN: You say that Mitt Romney has a vision, that he’s trying for something big. Lay out what that vision is.

MATT TAIBBI: Well, Mitt Romney is really the representative of an entire movement that’s taken over the American business world in the last couple of decades. You know, America used to be—especially the American economy was built upon this brick-and-mortar industrial economy, where we had factories, we built stuff, and we sold it here in America, and we exported it all over the world. That manufacturing economy was the foundation for our wealth and power for a couple of centuries. And then, in the '80s, we started to transform ourselves from a manufacturing economy to a financial economy. And that process, which, you know, on Wall Street we call financialization, was really led that—sort of this revolution, where instead of making products, we made transactions, we made financial products, like credit default swaps and collateralized debt obligations. We created money through financial transactions rather than building products and selling them around the world. And that revolution was really led by people like Mitt Romney. And the advantage of financialization, from the point of view of the very rich and the people who run the American economy, is that it was extremely efficient at extracting wealth and kicking it upward, whereas the old manufacturing economy had the sort of negative effect of spreading around to the entire population. In the financialization revolution, you can take all of the money, and you don't have to spread it around with anybody. And Mitt Romney was kind of a symbol of that fundamental shift in our economy.

AMY GOODMAN: Yesterday, Democracy Now!'s Mike Burke caught up with the Texas governor, Rick Perry, and asked him about his comment about Mitt Romney, calling him a vulture capitalist. Let's take a listen.

MIKE BURKE: You described Mitt Romney, compared him to a vulture. What did you mean by that? And you said his work with Bain Capital was indefensible.

GOV. RICK PERRY: How are you?

MIKE BURKE: Those were your words during the primary season, Governor. Do you have any comment at all?

AMY GOODMAN: What you were just listening to was the silence of Governor Perry not responding to Mike’s question. Yes, Governor Perry called Mitt Romney a "vulture capitalist." Matt Taibbi, what does that mean?

MATT TAIBBI: Well, look, again, this is what—how companies like Bain made their money. And a great example was a company that I went and visited—well, the place where it used to exist—KB Toys, which used to be headquartered out in Pittsfield, Massachusetts. They took over the company with like $18 million down. They financed the other $302 million. So that’s borrowed money that subsequently became the debt of KB Toys. This is an important distinction for people to understand. When they borrowed that money to take over that company, they didn’t have to pay it back, KB had to pay it back. Once they took over the company, they induced it to do a $120 million, quote-unquote, "dividend recapitalization," which essentially means that the company had to cash in a bunch of shares and pay Bain and its investors a huge sum of money. And in order to finance that, they had to take out over $60 million in bank loans. So, essentially, you take over the company, you force them to make enormous withdrawals against their credit card, essentially, and pay the new owners of the company. And that’s essentially what they did. They took over a floundering company that was sort of in between and faced with threatening changes in the industry, and they forced them to cash out entirely and pay all their money to the new owners.

AMY GOODMAN: You know, just for the record, Governor Perry’s comment about Mitt Romney was very interesting. He said, "They’re vultures that sitting out there on the tree limb waiting for the company to get sick, and then they swoop in, they eat the carcass, they leave with that, and they leave the skeleton."

MATT TAIBBI: That’s exactly right. That’s exactly what they do. Again, they borrow money, they take over the company, the company now has this massive new debt burden. So, if the couple was already in trouble, if it was already having trouble meeting its bottom line, suddenly, not only does it have its old problems, now it has, you know, $300 million in new debt service that it has to pay. So it might be, you know, paying millions and millions of dollars every month.

A great example is Dunkin’ Donuts, whose parent company was taken over a couple years ago by a combination of Bain Capital and the Carlyle Group. Dunkin’ was induced to do one of those dividend recapitalizations. They had to pay half-a-billion dollars to their new masters. And just to pay the debt service on the loan they took out to make that payment to Bain and Carlyle, they’re going to have to sell like two-and-a-half million cups of coffee every month just to pay the debt service. So, that’s extraordinary. They are—they’re essentially vultures who hang out waiting for companies to get sick, then they forcibly take them over, and they extract fees, commissions and dividends, by force, essentially.

AMY GOODMAN: Earlier this week, Democracy Now! spoke to two workers from what’s now Sensata Technologies, which Bain Capital is majority owner. A hundred seventy workers there at the Sensata plant in Freeport, Illinois, are calling on Romney to help save their jobs from being shipped to China. The plant manufactures sensors and controls that are used in aircraft and automobiles. This is Tom Gaulrapp, a former—well, he’s a Sensata worker now, talking about the response that they’ve received.

TOM GAULRAPP: We’re there trying to save our jobs, and we were called communists. For trying to save our jobs from going to China from the United States, we were called communists. They—if there hadn’t been a large police group in there, I’m sure we would have been more threatened. They started this "U.S.A." chant. It’s like, yes, we’re all for the U.S.A., too. That’s what we’re trying to do here. We’re trying to keep well-paying manufacturing jobs from being moved out of this country to China. And they make it sound like we’re not patriotic. And it boggles the mind as to what they’re thinking.

AMY GOODMAN: That’s Tom Gaulrapp, and he’s describing going to an Iowa Romney campaign event last week—Romney was maybe seven rows in front of him—and asking about their jobs, their company owned by Bain, being sent to China. In fact, some of them went to China, the workers, to train the workers in China, so that they could take over their jobs. Their last day will be the Friday before the elections. They’ll be on the unemployment line to apply for unemployment on Monday. On Tuesday, they vote. Can you comment on this situation, Matt?

MATT TAIBBI: Yeah, no, it’s absolutely typical of a private equity transaction. I think one of the glaring misconceptions about this kind of business that’s persisted throughout Mitt Romney’s campaign for the presidency is that what these companies do is turn around and fix companies, that they’re in the business of helping these companies. Romney constantly uses this term, that he—that, you know, "help." "I’m either helping this firm, or I’m helping it turn around." He wrote a book called Turnaround. But they are not in the business of turning companies around and creating jobs. That is a complete mischaracterization. What they’re in the business of doing is repaying the investors who lent them the money to take over those companies. The workers are completely irrelevant in this scheme.

Romney is—you know, the old-school industrialists, like Mitt Romney’s father, they were men and women who built communities. They had factory towns. They were very anxious to leave, you know, hard legacies that people could see: hospitals, churches, schools—you know, the Hersheys of the world, the Kelloggs. But these new owners have absolutely no allegiance to American workers, American places, American communities. Their only allegiance is to the investors and to themselves. And so, it’s not at all uncharacteristic to have these situations where people are pleading for their jobs or they’re saying, you know, "We’ll tighten our belts, if you just make this concession and keep us." That’s irrelevant to the Mitt Romney-slash-Bain Capital-slash-Carlyle Groups of the world. They’re entirely about making profits. And if that means shipping jobs to China or eliminating jobs, that’s what they’re going to do. And that’s the new generation of corporate owners in this country.

AMY GOODMAN: Matt, last month, Mitt Romney gave a series of TV interviews defending his role at Bain Capital. This is Mitt Romney speaking to CNN’s Jim Acosta.

MITT ROMNEY: There’s nothing wrong with being associated with Bain Capital, of course. But the truth is that I left any role at Bain Capital in February of '99. And that's known and said by the people at the firm. It’s said by the do ents, offering do ents that the firm made subsequently about people investing in the firm. And I think anybody who knows that I was out full time running the Olympics would understand that’s where I was. I spent three years running the Olympic Games. And after that was over, we worked out our retirement program, our departure official program for Bain Capital, and handed over the shares I had. But there’s a difference between being a shareholder, an owner, if you will, and being a person who’s running an en y. And I had no role whatsoever in managing Bain Capital after February of 1999.

AMY GOODMAN: That was Mitt Romney on CNN. Matt Taibbi, he’s referring to the—that time gap, 1999, when he said he left, to 2000, 2001, 2002. The significance of this?

MATT TAIBBI: You know, I don’t think it’s terribly important whether he was actively sitting at the helm during that time or whether he was just passively accepting the vast amounts of money that were sent his way as the result of the deals that were concluded at that time. Again, Mitt Romney—well, I’m sorry, Bain Capital took over KB Toys during that disputed time period and made an enormous profit. I think their profit was something like $100 million out of that deal. And Mitt Romney shared in that, in that largesse, even whether he was, you know, actively strategizing or not. You know, the groundwork for deals like that had been laid in the decades before that where he was actively involved in deals like taking over a company like Ampad, which was a very similar deal to the KB deal. So, it’s irrelevant to me, and I think it should be irrelevant to everybody, whether he was actually working there or not. He shared in the profits and clearly didn’t have a problem with any of those deals.

AMY GOODMAN: Matt Taibbi, you have said that Mitt Romney’s fortune would not have been possible without the direct assistance of the U.S. government.

MATT TAIBBI: Yes, there’s a tax deduction for all that borrowed money. So, when Mitt Romney or Bain Capital, when they want to go take over a company like KB Toys and they borrow $300 million to do it, and that new debt becomes the debt of KB Toys, when KB pays the debt service, the monthly service on that debt, that service is deductible. And if that were not true, if they did not have that deduction, these deals would not be economically feasible. They wouldn’t be possible. I spoke to one former regulator from the SEC, who worked both in the SEC and as an accountant at a Big Four accounting firm, and he reviewed a number of these deals in both a public and private capacity. And he said, without that deduction, he’s never seen a deal that would have been economically—a private equity deal that would have been economically feasible. So, this entire business model depends upon a tax break.

AMY GOODMAN: Talk about Romney’s role in Bealls Brothers and Palais Royal. And how is Michael Milken involved with this?

MATT TAIBBI: Sure. And just generally speaking, these private equity deals, they’re made possible by these sort of get-rich-quick, easy-money schemes that started appearing on Wall Street in the '80s. Again, in the old days, the real power in the American economy was—belonged to the industrialists, the guys who—men and women who actually made things, because they had—they were the primary sources of cash and revenue. But in the ’80s, we started to develop all these new methods of simply creating money out of thin air. And the first great one in the ’80s was Mike Milken's junk bonds. And this ability to conjure instant millions gave people, like the fictional Gordon Gekko, the power to take over, you know, mighty companies—airlines, you know, industrial companies—whereas 10, 15, 20 years ago, somebody who didn’t have his own fortune would never have been able to take over those companies.

And that’s what happened with this transaction with Bealls. Romney used Mike Milken’s junk bonds to take over a couple of department store chains, which he subsequently merged. And even after finding out that Milken was under investigation and would shortly have to go to court to defend himself on fraud charges, Romney pressed ahead with the deal anyway and ended up making, you know, another tidy profit on that deal.

AMY GOODMAN: Matt, finally, what do you feel reporters here at the Republican National Convention should be asking Mitt Romney about his time at Bain?

MATT TAIBBI: Well, I just think that the—

AMY GOODMAN: And what his plans are for the presidency?

MATT TAIBBI: Sure. I just think the one unanswered question that reporters just don’t ask either of these people is—they’re making their entire platform about debt. Paul Ryan, his entire political profile is based on this idea that he’s an enemy of debt and a, you know, budget slasher. And Mitt Romney has—again, he’s banked his entire campaign rhetoric on the sort of prairie fire of debt theme. And yet, this is a guy who spent—who made his fortune creating debt. Somehow, this question has not been asked to him. How is that not hypocritical? It hasn’t been asked of either of them, and I would like to see the mainstream press at least ask that question. I think it’s an ideal debate question that should be asked somewhere down the line


http://www.democracynow.org/2012/8/3...itt#transcript

[boutons_deux]

Romney's Success at Bain Capital: The Scam as Business Model

it is important to understand that Romney is not a successful businessman in the same way as others who have built successful companies.

But each of these people could take credit for building companies that produced wealth. That is not the case with Mitt Romney.

Private equity companies like Bain Capital are not primarily about producing wealth. They profit largely by siphoning off wealth created elsewhere in the economy. There are many different ways in which this diversion of wealth is accomplished.

The simplest and most common trick is gaming the tax code. It is absolutely standard practice for private equity firms to immediately load up the companies they acquire with debt. This has two benefits for the PE companies. First, it allows them to get most of their money back right away. They end up with a heavily leveraged company, where the PE company is still in control, but has little of its own money at risk.

The other benefit is that the interest on the debt, unlike dividends paid out to shareholders, is tax deductible. This means that even if the PE company does nothing to improve the operations of a company it acquires, it will increase its profitability by reducing its taxes.

Of course PE companies like Bain are likely to have more sophisticated tax avoidance strategies as well. As Romney said in a recent campaign speech, big companies know the tax tricks, small companies often are stuck paying the taxes they owe. This means there can be big profits by acquiring smaller companies and teaching them how to game the tax code.

http://truth-out.org/news/item/11316...business-model

[cantthinkofanything]

Have there been any accurate Rolling Stones articles to date posted here/

They did a great article on Motley Crue a while ago. It was sometime after Vince Neil wrecked his car and killed Razzle. It was incredibly insightful.

[z0sa]

Boutons once again put to shame by the truth. It must suck being such a ___teamer that you can't even see your own lies any more.

[boutons_deux]

"Boutons once again put to shame by the truth"

You Lie

you wouldn't know the truth if it crawled up your nose

[Wild Cobra]

They did a great article on Motley Crue a while ago. It was sometime after Vince Neil wrecked his car and killed Razzle. It was incredibly insightful.

Was it posted here?

[Winehole23]

after the excerpted, the author gives a point by point rebuttal, explaining what he thinks Taibbi got right and what he got wrong.

----------------------------------------------------------------------------------------

Very few of my friends understand private equity, let alone care about it. But some of them wrote me this past weekend, after reading Matt Taibbi's new cover story for Rolling Stone about Mitt Romney's time with Bain Capital. For example, this was from my former college housemate Andrew:

I read the Taibbi article in Rolling Stone. Reading it you can obviously see that the guy has a fairly biased opinion on private equity and Wall Street dealings in general. What's the industry's defense of PE? I assume the truth is somewhere between Mitt's verision of Bain as a massive jobs creator and Gordon Gekko-esque corporate raiders.

Andrew has good instincts. Taibbi took out the long knives for this one, which means he sacrificed a bit of accuracy for potency.


His overall thesis is correct: There is a fundamental hypocrisy in a former leveraged buyout investor railing against America's ballooning debt. Leveraged buyouts, by definition, add debt to a company's balance sheet -- weighing it down in the short-term so that it can (hopefully) thrive in the long-term. Romney defenders point out that America is not the same as a private equity-backed company, a truism that only goes to underscore the flimsiness of using Romney's Bain Capital experience as a singular qualification for the Oval Office.

http://finance.fortune.cnn.com/2012/...iid=SF_F_River

[boutons_deux]

"weighing it down in the short-term so that it can (hopefully) thrive in the long-term"

ing bull .

the cash from putting the victim company into debt is to pay off the PE investors, who don't GAF what happens to the company.

[Winehole23]

so emotional. so easily thrown off balance.

[boutons_deux]

I'm a cold-blooded slapper

[Winehole23]

[cantthinkofanything]

Was it posted here?

I think so.

[TeyshaBlue]

I'm a cold-blooded slapper

[Th'Pusher]

after the excerpted, the author gives a point by point rebuttal, explaining what he thinks Taibbi got right and what he got wrong.

----------------------------------------------------------------------------------------

http://finance.fortune.cnn.com/2012/...iid=SF_F_River

And Taibbi counters each of his counterpoints