The Ugly Facts of Mitt’s Romney’s Business Dealings Are Slowly Coming to Light

They Explain Why Mitt Just Doesn’t Want This Story Out

The business career of Mitt Romney will be an issue in the Presidential campaign.  The main reason is that Mr. Romney is making it an issue.  He is touting his business experience and supposed experience in job creation and working in the real economy as a reason why he should be elected President.  At the same time Mr. Romney is doing everything possible to hide the results of his business activities.

The reason for this evasion is simple.  Mr. Romney profited mightily from the buying of companies with other people’s money.  And he profited in spite of the fact that the action of buying companies and loading them up with debt in some cases resulted in the failure of those companies.  Those failures cost many people their jobs, and at the same time resulted in millions of dollars for Mr. Romney and his cohorts.

Mr. Romney has argued that much of what happened to companies and the loss of jobs occurred after he left Bain capital, the company where he made his millions.  But investigative reporting by the New York Times has revealed that contrary to what Mr. Romney has been saying, he continued to profit from the Bain activities long after he left the company.

In what would be the final deal of his private equity career, he negotiated a retirement agreement with his former partners that has paid him a share of Bain’s profits ever since, bringing the Romney family millions of dollars in income each year and bolstering the fortune that has helped finance Mr. Romney’s political aspirations.

The arrangement allowed Mr. Romney to pursue his career in public life while enjoying much of the financial upside of being a Bain partner as the company grew into a global investing behemoth.

So Mr. Romney cannot have it both ways, although he is certainly trying to.  He wants to capitalize on his business experience without taking any blame for what his actions and the actions of his company did to thousands of people.  Case in point is KB Toys.

The 2000 purchase of KB Toys, then one of the country’s largest toy retailers, became one of the most contentious.

As in most Bain deals, the partnership put up a small fraction of the money — in this case $18 million — and borrowed the rest of the $302 million purchase price. Just 16 months later, the toy company borrowed more to pay Bain and its investors an $85 million dividend.

In the business world this is called “looting”.  The buyout deal used company assets as collateral to borrow money (this is called a "leveraged buyout" or "lbo").  The money did not benefit the company, it benefited the investors who turned $18 million into $85 million.  As for the company

 it also left the toy company with a heavy debt burden. Before long, the company began closing stores around the country and laid off 3,400 workers. It filed for bankruptcy protection in 2004.

Mitt Romney will not release his personal tax information, and speculation is the reason for this is that it will show he has taken advantage of a loophole in the tax laws that allows him to pay a far lower tax rate than most working middle class Americans.  Now it may be unfair to ascribe any of this malevolence to Mr. Romney, but all he has to do to correct the record is to release the information.

That he refuses to do so is not evidence that he wants to keep his private financial affairs private.  It is evidence (but not proof) that he has something to hide.