HNewsWire-Brian Capital,Mitt Rommey,Choke hold specialist, NWO vulture capitalist, if the investment doesn't work, he sells the asset's within the failing company,choke hold specialists Matt Romney would gladly sell the American assets(Freedom)to the highest bidder(NWO) he's a scumbag at large...Lawless.
Matt Taibbi Reveals How Romney Made His Fortune -- It Ain't Pretty, and He Shouldn't Be Proud of It..
"Earned" is a very generous way to put it.
Editor's note: The following is a transcript of a Democracy Now! interview with Rolling Stone contributing editor Matt Taibbi, whose in the magazine gets to the bottom of Mitt Romney's enormous wealth.
A new article by reporter Matt Taibbi in Rolling Stonesheds 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.
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.Really...
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 documents, offering documents 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 entity. 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 theSEC 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.
AMY GOODMAN: Matt Taibbi, I want to thank you very much for being with us, contributing editor for Rolling Stone magazine. His most recent article in Rolling Stone is "Greed and Debt: The True Story of Mitt Romney and Bain Capital." Matt Taibbi is author of the book Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History. RUN PEOPLE...
Romney Bain Capital Scandal: Why Possible Mitt Romney Lies Matter
For those of you unfamiliar with the emerging scandal involving Mitt Romney and Bain Capital, I have broken down the debacle into five convenient sets of bullet points:
In a federal disclosure form filed on August 12, 2011, Mitt Romney wrote that he had retired as CEO of Bain Capital to run the Salt Lake City Winter Olympics on February 11, 1999. Since then, Romney wrote, he had not "had any active role with any Bain Capital entity and has not been involved in the operations of any Bain Capital entity in any way."
Last week, the Boston Globe revealed Bain Capital filed documents with the Securities and Exchange Commission (SEC) as late as 2002 reporting Romney as "sole stockholder, chairman of the board, chief executive officer, and president" of the company. Massachusetts financial disclosure forms also report that he earned at least $100,000 as a Bain "executive" in 2001 and 2002 and owned 100% of the company as of 2002.
Independent sources are being discovered that also suggest Romney continued his involvement in the company after 1999. These include a Boston Globe article from 2002 in which Romney is referred to multiple times as the "CEO of Bain Capital until 2001" and testimony given by Romney that same year in which he mentions attending board meetings for at least three of Bain's companies, LifeLike Co., Marriott International, and Staples. At that same hearing, one of Romney's lawyers even declared that, “Now while all that was going on, very much in the public eye, what happened to his private and public ties to the Commonwealth of Massachusetts? And the answer is they continued unabated just as they had.
A decade ago, Romney would have had good reason to exaggerate his involvement with Bain Capital. Back when he was running for Governor of Massachusetts, a controversy emerged as to whether Romney still qualified as a state resident, given his extensive work in Salt Lake City. His continued business involvement with Bain Capital was cited as among the pieces of evidence proving that he had maintained sufficient ties with Massachusetts to be eligible for higher office in that state.
Romney also had a motive for lying on his federal disclosure form last year. It is well-known that Bain Capital was responsible for numerous layoffs between 1999 and 2002, a fact that could work against Romney as he attempts to win over unemployed voters who blame corporate cupidity for their plight. Indeed, even Newt Gingrich briefly broached this subject during his campaign against Romney for the nomination last year.
Now Romney has a motive to do everything in his power to reconcile the apparent inconsistency between what he said during the 2002 gubernatorial election (that he had been involved with Bain up to that year) and what he is saying during this election (that he left Bain in 1999). That is because, if he lied on any of the key government documents in question, he committed a felony.
If Mitt Romney lied on his SEC forms, it would constitute a violation of Rule 10b-5 of the Securities and Exchange Act of 1934.
If Mitt Romney lied on last year's federal disclosure form, it would constitute a violation of the False Statements Accountability Act of 1996.
Obama's team is missing the point. In a statement made by campaign senior adviser Stephanie Cutter, they claimed that:
"Either Mitt Romney, through his own words and his own signature, was misrepresenting his position at Bain to the SEC, which is a felony, or he was misrepresenting his position at Bain to the American people to avoid responsibility for some of the consequences of his investments."
This isn't entirely accurate, since it depicts Romney as being either a criminal (if he lied on his SEC forms) or simply dishonest (if he lied on his his 2011 federal disclosure form). Clearly the Obama people need to read the False Statements Accountability Act of 1996, since if they did, they'd realize that both acts are illegal. If Romney lied on either one of those occasions, he broke the law.
- Romney's team, naturally, is trying to avoid the issue by blaming Obama for bringing it up. As Romney campaign manager Matt Rhoades put it:
"President Obama's campaign hit a new low today when one of its senior advisers made a reckless and unsubstantiated charge to reporters about Mitt Romney that was so over the top that it calls into question the integrity of their entire campaign. President Obama ought to apologize for the out-of-control behavior of his staff, which demeans the office he holds. Campaigns are supposed to be hard fought, but statements like those made by Stephanie Cutter belittle the process and the candidate on whose behalf she works."
Regardless of whether you feel Obama's campaign should have broached the possibility of criminal wrongdoing or allowed the media to explore that on its own, none of those questions have anything to do with whether Romney broke the law.
- The media's reaction to this can be summed up in one word: pathetic. Instead of simply reporting the relevant information as it comes out and demanding answers from the various parties involved, different outlets have taken sides, with Mother Jones, Talking Points Memo, and MSNBC blasting Romney while Fortune Magazine, FactCheck.org, and CNN's John King defend him. On all of these occasions, in lieu of definitive proof as to Romney's innocence or guilt, these publications instead rest on their own personal, and entirely subjective, interpretations of the law and existing evidence. Even the fact-checker for 'The Washington Post,' Glenn Kessler, had to rest his defense of Romney on the vague wording of the Massachusetts Ballot Law Commission report (even as ignored the testimony Romney had given at the same time) and on his belief that Romney would never have perjured himself on the 2011 financial disclosure form. While this would be appropriate in a political debate or a court of law, it merely serves to muddle the issues in the eyes of voters who depend on these news sources. All the media should do is (a) report the details of the alleged discrepancy in Romney's accounts of his career at Bain and explain the potential legal consequences of that discrepancy, (b) provide Romney with a fair forum with which to offer his own side of the story, and (c) ask him to defend his position should part or all of it be found wanting. The decision as to who is right and wrong here should be left to the people and, if necessary, the courts.
The American people have the right to know if they are electing a potential felon before casting their ballots. We can't afford a repeat of the 1972 presidential election in which, despite the gradual emergence of details about the Watergate scandal, the reticence of journalists to delve deeply into the story (aside from Bob Woodward and Carl Bernstein) deprived Republican Party delegates, and eventually the voters themselves, of the information they needed to avoid electing a man who would be forced to resign less than two years later. As such, it behooves the Obama campaign and the media to do the following:
They should demand that Mitt Romney release his tax returns tracing back at least to 1999. Not only would this answer other lingering questions about the degree to which his great wealth helped him to pay less in taxes than middle-class and working class Americans, but it would also provide new information that would help us understand his relationship with Bain Capital during the period in question.
They should demand that all documents which are potentially germane to any role Romney might have played with Bain Capital between 1999 and 2002 be released to the public. This includes not only forms from that company, but those from LifeLike Co. and Staples.
They should demand that Romney write an editorial, to be printed in the publication of his choice, explaining clearly and unambiguously how he can reconcile the seeming discrepancy between what he said a decade ago and what he is saying today. Rather than expecting the rest of us to parse through the facts and come to our own conclusions, he should step up and provide a thorough explanation of what he claims happened, so that we can compare his story to the facts and see if they match up.
They should demand that Romney answer all reasonable questions about his career at Bain Capital between 1999 and 2002 and, more important, draw attention to any and all instances in which he evades certain questions or provides inaccurate responses.
Regardless of whether one supports or opposes Romney, there is no doubt that valid questions exist as to whether he broke the law. Until those questions are answered one way or another, we have a responsibility to make sure that America keeps hearing them being asked.
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"It is better to be divided by truth than to be united in error. It is better to speak the truth that hurts and then heals, than falsehood that comforts and then kills. Let me tell you something, friend, it is not love and it is not friendship if we fail to declare the whole counsel of God. It is better to be hated for telling the truth, than to be loved for telling a lie. It is impossible to find anyone in the Bible who was a power for God who did not have enemies and was not hated. It’s better to stand alone with the truth, than to be wrong with a multitude. It is better to ultimately succeed with the truth than to temporarily succeed with a lie. There is only one Gospel and Paul said, ‘If any man preach any other gospel unto you than that which we have preached unto you, let him be accursed.”
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