NEW ROMNEY VIDEO: In 1985, He Said Bain Would "Harvest" Companies for Profits
This clip shows the young CEO focusing on businesses as targets for his investors, not as job creators or community stakeholders.
By David Corn | Thu Sep. 27, 2012 3:00 AM PDT
Campaigning for the presidency, Mitt Romney has pointed to his stint as the founder and manager of Bain Capital, a private equity firm, as proof he can rev up the US economy and create jobs at a faster clip than President Barack Obama. Last year, while stumping in Florida, Romney declared, "You'd have a president who has spent his life in businesssmall business, big businessand who knows something about how jobs are created and how we compete around the world." His campaign spokeswoman, Andrea Saul, has said that Romney's Bain days afford him more expertise than Obama to "focus on job creation and turn around our nation's faltering economy." Romney has even claimed that during his tenure at Bain, "we were able to help create over 100,000 jobs." In his acceptance speech at the Republican convention, Romney smacked Obama for having "almost no experience working in a business" and tied that to the sluggish recovery.
But at Bain, Romney's top priority wasn't to boost employment. As the Wall Street Journal recently noted, creating jobs "wasn't the aim of Bain or other private-equity firms, which measure success by returns produced for investors." And, the newspaper reported, Romney's 100,000-jobs claim is tough to evaluate.
Mother Jones has obtained a video from 1985 in which Romney, describing Bain's formation, showed how he viewed the firm's mission. He explained that its goal was to identify potential and hidden value in companies, buy significant stakes in these businesses, and then "harvest them at a significant profit" within five to eight years.
The video was included in a CD-ROM created in 1998 to mark the 25th anniversary of Bain & Company, the consulting firm that gave birth to Bain Capital. Here is the full clip, as it appeared on that CD-ROM (the editing occurred within the original):
Something tells me that The Thief Class isn't through yet.
When I read that my first initial reaction is it sounds freakin' ghoulish like "harvesting organs".
But that's exactly something "vulture capitalists" like Bain do. Ick.
Sounds more like something we'd use to describe what he did. Guess he's proud to have "harvested" for profit.
Romney sucked the money out of a company and tossed the employees aside the way a vulture leaves inedible portions to rot.
David Corn deserves a ton of credit for the amazing reporting he's been doing this election cycle.
Once "harvested", a company can "realize its full potential". No need to allude to countless human casualties along the way. Yeah, Mitt Romney certainly cares about the 100% all right.
I don't think Obama should be doing that. He doesn't need it.
It wouldn't hurt to keep the word "harvest" close at hand because that could be handy in the debates at just the right moment, such as "Governor Romney says he knows how to build businesses, but it seems like his experience is actually in 'harvesting' companies for profit. In fact that is exactly the word he used when pitching Bain to investors."
He helps them reach their full potential and then harvests them right down to the ground.
Bain reaps the profits, the workers lose their jobs. Venture capitalism.
Taking the word "harvest" out of context is the kind of thing Faux does every day and we should be better than that. It isn't necessary to quote Romney out of context.
He is clearly talking about harvesting the proceeds from the investment. That is what any investor does.
I think it is completely fair to present the quote in its full context and then follow it with examples of how Bain actually operated. It seems from their track record that Romney's view of "harvest" is different from simply getting a return on investment.
My point is, don't do the Faux thing. Don't go overboard making a singular issue about one word he spoke 15 years ago. But it is certainly fair to connect his prediction with what actually happened.
companies going. That IS the point of the word harvest. The context is pretty coded language. Isn't harvest a lovely word itself? We all know the record. Everyone in the US does. In hindsight, the word harvest sounds horribly ugly since we DO know.
This is politics. And it is also the damned TRUTH about Romney and Bain.
Venture capital firms generally invest in start-ups and they are all about helping the company be profitable ASAP. If not profitable, they at least want to help the company become successful enough that they can raise their own money through the equity markets. Anybody who values entrepreneurship and sees that as essential to our future should be supportive of venture capital firms and the role they play.
Bain is not a venture capital company. They did a little of that but that was not their main business. They were and are a "private equity" firm, along the lines of Blackstone, KKR, Carl Icahn and other notorious companies. Some of these companies do play a valuable role in providing a second chance for companies that managed to get near death's door. I think there are plenty of good examples where KKR has saved companies that otherwise would have disappeared. It isn't always a good story, but there are companies in this category providing an important service for our capitalist system.
Please note that venture companies don't want to be associated with private equity at all. They have a trade group that does its best to maximize the distance between "venture capital" and "private equity".
One very clear line of distinction is that venture capital puts their own money into the deal, and they are betting on the SUCCESS of the company. Private equity companies usually structure deals where they have little of their own money at risk. And when you operate like Bain, you virtually guarantee yourself a nice return even if the company fails.
This is where the "harvest" comment becomes really important. It separates companies like Bain that are just trying to suck resources, from companies like KKR that usually have a genuine interest in the acquired company returning to health.
It isn't a really bright line of separation. KKR has done some ruthless takeovers and Bain has had a few where the company actually survived the operation. But on the whole, Bain was about "harvesting" or sucking resources out of the takeover target with little concern whether the target lived or died.
He still looks like a robot, but it's a robot in its natural element, relating to money, not people.
the use of the word "harvesting" by Romney in this video and I realized the word,as used in this way was ghoulish. It brought back into focus, for me, the ad "Stage" where the worker, fired by Bain under Romney after he and his fellow workers had to build the very stage from which they were told they were fired, said this:
"It was like building my own coffin"
The result of Bain and Romney's "harvesting".