If the Obama campaign had the power to go back in time and orchestrate a troubling episode in Mitt Romney’s past, it might look something like this: Romney’s Bain & Co. gets itself into deep debt when it spins off Bain Capital, Romney’s private equity company. Romney is asked to come back and save the company. He obliges. The parent company comes so close to bankruptcy — an embarrassing prospect for a consulting firm that is meant to tell other companies how to avoid doing things like go bankrupt — that it has to make a special deal with the banks to which it owes money, including one that had recently been taken over by the FDIC, the federal government’s agency that saves troubled banks.
Then it gets bad. Romney being Romney cleverly inserts a clause into the agreement that would give Bain executives first dibs on any cash left over if Bain goes under, ensuring they get big bonuses, even if all the rest of the employees are fired and the creditors are wiped out. This makes bankruptcy an undesirable option for the banks and the federal government. Meanwhile, the chairman of the FDIC happens to be Bill Seidman, who had served as finance chair for Romney’s father’s presidential campaign. Twisting arms and calling in favors, Romney negotiates a deal that saves Bain and his reputation, and screws the government in the process — forced bailout.
It might sound like David Axelrod’s fever dream, but it all actually happened, according to FDIC documents obtained by Rolling Stone’s Tim Dickinson through a Freedom of Information Act request.
Bain is central to Romney’s origin myth, as is the notion that he built it with nothing but his wits and handiwork, and no help from Uncle Sam, thank you very much. But in the end, Dickinson reports:
The FDIC agreed to accept nearly $5 million in cash to retire $15 million in Bain’s debt – an immediate government bailout of $10 million. All told, the FDIC estimated it would recoup just $14 million of the $30 million that Romney’s firm owed the government. It was a raw deal – but Romney’s threat to loot his own firm had left the government with no other choice. If the FDIC had pushed Bain into bankruptcy, the records reveal, the agency would have recouped just $3.56 million from the firm.
Mitt Romney, you didn’t build that.