“Invisible And Untaxed”: How Mitt Romney Made A Fortune Off The Auto Bailout
Faced with the hard facts that “bin Laden is dead and General Motors is alive,” as Vice President Biden always says, Mitt Romney has resorted to claiming that Obama followed his lead on the auto industry bailout. “I know [Obama] keeps saying, you wanted to take Detroit bankrupt,” he said during this week’s debate at Hofstra University. “Well, the president took Detroit bankrupt.” Romney’s right, in a way — both his plan and Obama’s plan envisioned the auto companies going through a period of bankruptcy restructuring. But there’s a key difference: Obama’s approach was to use government dollars to prop up the auto companies until they could stand on their own again — something that Romney, like other Republicans in the Tea Party’s anti-spending thrall, adamantly opposed as dangerous government intervention in private industry.
But it turns out that Romney should know firsthand that this kind of intervention can be successful, as a new report shows that he and his wife made at least $15.3 million courtesy of Obama’s auto bailout. According to a Greg Palast, who followed the paper trail for the Nation, Romney and his wife made the money via an investment in a hedge fund that saw astronomical returns on its investments in an auto parts maker that would have gone under absent the president’s rescue operation.
Delphi, the auto parts company, was once part of General Motors but was spun off in 1999. It foundered on its own and declared bankruptcy in 2005, at which point hedge funds came in and bought up the company’s old debt. Among them was Elliott Management, a giant in the industry run by GOP mega-donor Paul Singer. Romney was an investor. Elliott and the other hedge funds were able to buy Delphi’s toxic debt for a fraction of their face value, around 20 cents on the dollar. In 2009, as bailout negotiations were underway, Elliott used their bonds to buy large shares in the company, again for pennies (this time for about 67 cents per share). Not only would Delphi have gone out of business along with its largest customer, GM, but the parts maker got at least $2.8 billion directly from the taxpayer-funded Troubled Assets Relief Program (TARP). In 2011, Elliott and the other hedge funds took Delphi public at $22 a share, making a whopping 3,000 percent return on their investment of less than 70 cents a share.
So how much did Romney make? His personal financial disclosure forms say he and Ann Romney had at least $1 million invested, but the disclosure rules are so vague that it could be far more. Palast sketches out the possible windfall:
It is reasonable to assume that Singer treated the Romneys the same as his other investors, with a third of their portfolio invested in Delphi by the time of the 2011 initial public offering. This means that with an investment of at least $1 million, their smallest possible gain when Delphi went public would have been $10.2 million, plus another $10.2 million for each million handed to Singer — all gains made possible by the auto bailout.
But that’s just the beginning. Since the November 2011 IPO, Delphi’s stock has roared upward, boosting the Romneys’ Delphi windfall from $10.2 million to $15.3 million for each million they invested with Singer… The Romneys’ exact gain, however, remains nearly invisible—and untaxed—because Singer cashed out only a fragment of the windfall in 2011.
By: Alex Seitz-Wald, Salon, October 19, 2012
“More Problems For Romney”: After Sabotaging The Economy, Republicans Now Desperate For An “America Under Siege”
One reason the Benghazi controversy has always seemed so bogus to me is that I’ve never bought the core premise, which is that the administration had any clear political reason or advantage to gain by claiming the attack was tied to the video as opposed to a pre-planned assault. (Here’s our look at how Benghazi evolved into a GOP talking point.) In addition to a great number of hacks peddling this idea, some people I respect a great deal seem to credit the idea too. But again, it doesn’t add up to me.
However that may be, the factual premise itself now seems to be coming apart. In this morning’s Washington Post, David Ignatius comes forward with new evidence suggesting that Susan Rice’s now notorious claims about the centrality of the video were pretty much verbatim from CIA talking points prepared that day for administration officials.
From Ignatius …
The Romney campaign may have misfired with its suggestion that statements by President Obama and U.N. Ambassador Susan Rice about the Benghazi attack last month weren’t supported by intelligence, according to documents provided by a senior U.S. intelligence official.“Talking points” prepared by the CIA on Sept. 15, the same day that Rice taped three television appearances, support her description of the Sept. 11 attack on the U.S. Consulate as a reaction to Arab anger about an anti-Muslim video prepared in the United States. According to the CIA account, “The currently available information suggests that the demonstrations in Benghazi were spontaneously inspired by the protests at the U.S. Embassy in Cairo and evolved into a direct assault against the U.S. Consulate and subsequently its annex. There are indications that extremists participated in the violent demonstrations.”
Meanwhile, an article published yesterday afternoon in the LA Times suggests that these initial reports remain what US intelligence still believes happened: an attack with relatively little advanced planning, a high degree of disorganization and at least some level of triggering by the riots in Cairo earlier that day.
From the LAT …
The attack was “carried out following a minimum amount of planning,” said a U.S. intelligence official, who, like others, spoke on condition of anonymity to discuss a matter still under investigation. “The attackers exhibited a high degree of disorganization. Some joined the attack in progress, some did not have weapons and others just seemed interested in looting.”A second U.S. official added, “There isn’t any intelligence that the attackers pre-planned their assault days or weeks in advance.” Most of the evidence so far suggests that “the attackers launched their assault opportunistically after they learned about the violence at the U.S. Embassy in Cairo” earlier that day, the official said.
It would be wrong to think we now know what happened in any definitive sense. Maybe it was triggered by the video. Maybe it was planned months in advance. For me, the main issue is that a US diplomatic team was killed — and whether it was a relatively unplanned haphazard attack or one with a lot of advanced planning is operationally significant but sort of beside the point in political or policy terms. It underscores that Libya is an incredibly dangerous place right now and the Ambassador lacked the protection he should have had.
As I mentioned after the debate last week, Romney totally got hoisted on his own petard by the ridiculous hyperfocus on the word “terror”. But really the whole focus on this word only makes sense in a hyper-ideological mindset in which using the ‘terror’ buzzword signifies you fully understand some global war on Islamofascism which Romney’s advisors are trying to bring back from the middle years of the Bush era.
My global take remains the same: only in the final weeks or a presidential campaign, with one candidate desperate for a America under siege Carteresque tableau to play against, would this ever remotely have been treated like a scandal. A bunch of reporters basically got played and punk’d.
By: Josh Marshall, Editors Blog, Talking Points Memo, October 20, 2012
“No Deal Here Mr. Romney”: Why America Doesn’t Need A “Financier In Chief”
During the second presidential debate, Mitt Romney returned to one of the original themes of his campaign – namely that his financial experience at Bain Capital qualifies him to solve the problems of a nation plagued by unemployment and debt. Ridiculed and reviled in millions of dollars of advertising by his political rivals, from Newt Gingrich to Rick Perry to President Obama, Romney’s private sector career remains his central argument for electing him on November 6.
Today Peter A. Joseph, a respected and experienced figure in the private equity business as well as a civic activist, scrupulously debunks that argument on the New York Times website.
Over the past three decades, Joseph founded two private equity firms, gaining considerable insight into Romney’s success at Bain as well as the differences between political leadership and investment savvy. While not unsympathetic to the pressures Romney faced at Bain or his industriousness in overcoming them, Joseph says those financial triumphs have no special relevance to the Oval Office.
The role of the private-equity financier, he notes, has very little to do with being a “job creator”:
A businessman seeking to optimize profitability will look to lower labor costs by reducing headcount, whether through technology, outsourcing, or rationalization. This is right out of the basic playbook. It is not the mission of the financier to create jobs. In fact, his mission is often to do just the opposite.
Joseph gently tweaks Romney for indulging in harsh anti-government rhetoric when so much of his and Bain’s wealth derive from investing the pensions of teachers, cops, firefighters and other public-sector employees. (He might also have noted Romney’s venomous hatred of the very unions whose contractual power enabled him to get his hands on their accumulated assets.) He also suggests that Bain and other private-equity outfits have ripped off their clients, including the workers, through inflated fees:
Romney constantly derides big government, but government is made up of individuals, whose pension funds helped make him and Bain unimaginably rich. There is no doubt that these pension funds sought the higher returns offered by private-equity investing. But as the private equity business grew, the public pension funds and other capital providers have gotten the short end of the stick. They have not completely shared in the value of the franchise that is created in part by their investment in the industry. It seems odd to hear Romney criticize big government without any acknowledgment that he has made much of his fortune managing the retirement funds of many public employees.
Joseph concludes by contrasting the qualifications of a private-equity financier with what is required from a president of the United States, which don’t have much in common:
Romney’s financial success is admirable and enviable, but it came by following the mantra of increasing cash flow, cutting jobs and minimizing taxable income. Though the Obama campaign has tried to exploit this with millions of dollars in anti-Bain ads, the real issue is how Romney’s experience relates to a president’s need to balance budgetary responsibility with the heavy lifting required to address our collective concerns, our common obligations. We have heard a lot about pragmatism and practicality, but I can assure you that compassion and broader social concerns rarely make it into an investment memo. If Romney really wants to push his Bain experience, Americans will have to decide whether the answers to the problems facing them are best provided by a financier president.
By: Joe Conason, The National Memo, October 19, 2012
“Another Miscalculation”: Romney’s Odd Insistence On Using Bill Clinton As A De Facto Spokesperson
I’ve written before about the Romney campaign’s odd insistence on using Bill Clinton as a de facto spokesperson. Every so often, Team Romney highlights a comment by Clinton as a critique of President Obama, as if Clinton wasn’t an avowed and enthusiastic supporter of the president. The rationale, I suppose, is to be able to claim bipartisan discontent with Obama. The problem is that this does nothing more but boost Clinton’s credibility by turning him into a nonpartisan figure of repute. And as we saw during the Democratic National Convention, he can use this “referee” status to effectively hammer Mitt Romney and the Republican Party.
Indeed, it was after Clinton’s devastating speech that I expected Republicans to leave the former president out of the election. Turns out, they couldn’t resist: Today, Team Romney is distributing a clip of Clinton in Ohio, where he said that the economy has not been “fixed” under President Obama.
In their eagerness to use Clinton against Obama, it’s obvious that the Romney campaign failed to listen to what came after that statement.
Here’s the transcript:
“This guy ran Bain Capital and is a business guy, and he’s hiding his budget? That ought to tell you something. Well, he’s hiding his taxes, too, but he’s hiding his taxes in the years when he earned ordinary income. He’s given us two years when he was just running for president. And, he’s hiding whether he would have signed the Lilly Ledbetter act. He’s hiding everything. He doesn’t want you to think about him. He wants you to think, ‘Oh this economy is terrible. I’m a jobs guy.’ And as President Obama said in the debate, if I brought you a deal to Bain Capital and I said, fund my new business, I’ll give you the budget sometime in the future, just trust me on that, you wouldn’t give me one red cent, and we should not give him one vote on that.”
This is a potent message—it’s a variation on the “sketchy deal” language adopted by Obama—and by giving credibility to Clinton, Romney is making it stronger.
By: Jamelle Bouie, The American Prospect, October 19, 2012
“Mitt’s Ever-Slippery Position”: More Bobbing And Weaving on Abortion By Romney
Strangely enough, Mitt Romney’s ever-slippery position on abortion policy, one of the enduringly shameful features of his entire public career, is at the center of an argument that the mean old Obama campaign and the mean old Democrats are lying about Mitt’s positions and denying him his proper mantle of moderate conservatism.
Kevin Drum’s not having any of that:
It’s true that Romney thinks (accurately) that no flat ban on abortion is likely to cross the president’s desk in the near future. So in the sense of trying to figure out what will actually happen over the next four or eight years, it’s probably true that a President Romney wouldn’t have a chance to sign a flat ban on abortion.
But that’s only half of what any election is about. The other half is about what a prospective candidate wants to do. I don’t think the United States will ever return to the gold standard, for example, but the fact that Ron Paul supports it tells me that he’s a crank. That’s reason enough not to vote for him.
Likewise, even if Romney never has the opportunity to sign a nationwide ban on abortion, he’s obviously saying that he’d like to if he ever got the chance. What’s more, Romney probably would get a chance to overturn Roe v. Wade by appointing a Sam Alito clone to the Supreme Court, and he knows very well that this would result in plenty of states flatly banning abortion. This tells me he’s an abortion extremist, and it tells me a lot about who he is. It’s fair game.
Correct. But I’d go further. Aside from Romney’s comment on a hypothetical flat federal abortion ban, which would be obviously unconstitutional until such time as a President Romney stacked the Supreme Court to reverse Roe, he promised in his “My Pro-Life Pledge” ukase published by National Review in the early stages of the nomination fight to “advocate for and support a Pain-Capable Unborn Child Protection Act to protect unborn children who are capable of feeling pain from abortion.” That would be a federal version of the state legislation being promoted around the country testing the very margins of Roe by banning abortions before an arbitrary point at which a very small minority of scientists and a very large majority of antichoicers claim a fetus can feel pain.
So looking at the big picture, Mitt Romney’s promised to do everything within his power to restrict abortion rights under Roe, and then everything within his power to get it reversed, all within a “pro-life” position that sometimes does and sometimes doesn’t include exceptions for the incredibly tiny percentage of pregnancies resulting from rape, incest, or direct threats to the life of the woman involved. And this has been his basic position since 2007, or at least as long as Paul Ryan has refrained from public praise of Ayn Rand as his great mentor and become a self-proclaimed Thomist.
It should also be recalled that Mitt has identified himself unambiguously with the argument of conservative religious figures that the HHS contraception coverage mandate is objectionable because it includes “abortifacients,” reflecting the belief of anti-choice ultras that Plan B, IUDs, and even standard contraceptive pills actually kill human beings.
This does not add up to a “moderate” position on abortion, however Team Mitt tries to bob and weave and play the victim.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, October 19, 2012
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