Recent claims that the anti-Romney campaign ad, “King of Bain: When Mitt Romney Came to Town,” is seriously flawed may lessen its impact on the Republican presidential primaries. A story at the Washington Post, however, adds fresh fuel to the fire by suggesting that Romney’s actions when he ran Bain Capital were unscrupulous in ways having nothing to do with how many business he shut down or how many workers he fired.
Under the devastating headline, “When Romney ran Bain Capital, his word was not his bond,” Fortune editor William D. Cohan writes that “there is another version of the Bain way that I experienced personally during my 17 years as a deal-adviser on Wall Street: Seemingly alone among private-equity firms, Romney’s Bain Capital was a master at bait-and-switching Wall Street bankers to get its hands on the companies that provided the raw material for its financial alchemy.”
As Cohan outlines it, Bain’s standard strategy was to place the highest bid whenever bankers were selling a company at a private auction — “only to try to low-ball the price after it had weeded out competitors.”
“Bain would seek to be the highest bidder at the end of the formal process in order to be the firm selected to negotiate alone with the seller, putting itself in the exclusive, competition-free zone.” he explains. “Then, when all other competitors had been essentially vanquished and the purchase contract was under negotiation, Bain would suddenly begin finding all sorts of warts, bruises and faults with the company being sold. Soon enough, that near-final Bain bid — the one that got the firm into its exclusive negotiating position — would begin to fall, often significantly.”
“Other private-equity firms I worked with extensively over the years — Forstmann Little, KKR, TPG and the Carlyle Group, among them — never dared attempt the audacious strategy that Bain partners employed with great alacrity and little shame,” Cohan notes tartly. “Call it the real Bain way.”
Economist Paul Krugman cited Cohan’s article in an entry at his New York Times blog on Sunday, asking, “Would you buy a used company — or a used ideology — from this guy?”
This latest attack comes as many of the charges in “When Mitt Romney Came to Town” are failing to stand up to scrutiny. Newt Gingrich himself has asked the Winning Our Future super PAC which released the ad “to either edit its ‘King of Bain’ advertisement and movie to remove its inaccuracies, or to pull it off the air and off the Internet entirely.”
It seems, however, that questions involving Bain are not going to simply go away. Gingrich announced on Sunday that he will be releasing his income tax returns and challenged Romney to do the same. Romney has to this point refused to do so, leading to suggestions that “one of the reasons is that he probably pays less taxes than you do. As a corporate buyout specialist, he’s made millions of dollars in income from investments, which are taxed at a far lower rate than the wages of regular Americans — as low as 15% for the richest Americans in the country.”
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