How Romney Made His Money
Mitt Romney is a very rich man. He made the bulk of his money as the head of a private-equity (PE) company, which Newt accused of operating like a vulture capitalist. Dean Baker has a very good piece about how PE companies work and show that there is nothing that says a PE company adds value to a company it takes over.
Much of what private equity does is financial engineering. For example, it is standard to load up the companies they purchase with debt. The resulting interest payments are tax deductible. This increases profitability but creates no value for the economy. It simply transfers money from taxpayers to the private equity company....Private equity companies absolutely do not have to increase the value of a company to make a profit. They can end up making a profit on their investment even if they take the company into bankruptcy and leave it much worse off than it was before the takeover.
So when Bain Capital leaves companies it takes over bankrupt, Bain and Romney don't lose anything whereas the people who work for the company and the community that hosted the company lose a lot.
Furthermore, it seems that under Romney's leadership, Bain was a particularly deceitful company with which to deal. As William Cohan says today in the Washington Post,
Needless to say, this does not make for a very happy client (or a happy banker). By the end of my days on Wall Street in 2004, I found the real Bain way so counterproductive that I no longer included Bain Capital on my buyer’s lists of private-equity firms for a company I was selling....But Bain’s behavior also reveals something about the values it brings to bear in a process that requires honor and character to work properly. If a firm’s word is not worth the paper it is printed on, then its reputation for bad behavior will impair its ability to function in an honorable and productive way....I don’t know if Bain Capital still uses the bait-and-switch technique when it competes in auctions these days (I’m told that it doesn’t). But that was the way the firm’s partners competed when Romney ran the place. This win-at-any-cost approach makes me wonder how a President Romney would negotiate with Congress, or with China, or with anyone else — and what a promise, pledge or endorsement from him would actually mean.
This win-at-any-cost certainly has been made manifest by Romney's willingness to shamelessly lie and lie and lie.
So when will Romney release his tax records?