How Did Mitt Romney Get So Obscenely Rich? Robert Reich Explains

[IADEMO2004]

3. Great Clip

I'm saving it with the Pete Kotz column "Mitt Romney, American Parasite" from last week.

http://www.seattleweekly.com/content/printVersion/1728681/

Cut:

His formula was simple: Bain would purchase a firm with little money down, then begin extracting huge management fees and paying Romney and his investors enormous dividends.

The result was that previously profitable companies were now burdened with debt. But much like the Enron boys, Romney's battery of MBAs fancied themselves the smartest guys in the room. It didn't matter if a company manufactured bicycles or contact lenses; they were certain they could run it better than anyone else.

Bain would slash costs, jettison workers, reposition product lines, and merge its new companies with other firms. With luck, they'd be able to dump the firm in a few years for millions more than they'd paid for it.

But the beauty of Romney's thesis was that it really didn't matter if the company succeeded. Since he was yanking out cash early and often, he would profit even if his targets collapsed.

End Cut