Vulture Capitalism

26 posts / 0 new

OK, I'll use Bain as an example. Bain has a history of some successes and some failures. I use the word "failure" advisedly since there doesn't seem to be any failure amongs the principles at Bain. No matter if the target company succeeds or fails, these guys get paid and paid handsomely. I wonder why that is.

In my long ago days in business school, there was a thing called risk. It supposedly was unavoidable if you invested. Yet Bain doesn't seem to incur any risk in any of their ventures. After a little digging, I find out that often an initial loan is taken out with Bain as the borrower. This money is then used to buy into the target company. Thus Bain immediately becomes a priciple in that company. They then can transfer their debt that they used to buy in to the target company. Whoa!! Does that sound like it should be illegal? It surely does to me.

It seems they have now transferred any personal risk that Bain had to the target company. Now, as principles, they can make policy and they do so often by paying themselves consultant fees. If and when they sell the company that debt goes with the sale. Nice deal, eh? It's not illegal. However, it used to be illegal. That law was somehow removed from the books sometime during (you guessed it) the Reagan Administration. Like Glass Steagall, it sounds like a good law was wiped out by GOP Inc.

Combad57's picture
Combad57
Joined:
May. 29, 2012 12:50 pm

Comments

But most would have failed without the intervention of Bain. No company failed because of bain.

CollegeConservative's picture
CollegeConservative
Joined:
May. 4, 2012 2:22 pm

If the original loan was from a bank, what kind of security did Bain use to secure and obtain the loan? Then how did the original borrower get released from liability? I was in banking for 17 1/2 years and never saw this happen.

As an aside to your post, Combad57, I have made reference to one of Obama's national campaign co-chairmen, Federico Pena, as being a partner in Vespar Capital since 2000. Vespar does exactly the same thing as Bain. Yet, I have had NOT ONE response form the hypocritical ilk here on TH. NOT ONE!!! They seem to like to ignore what doesn't fit their agenda or meme. Their silence speaks volumes to the hypocracy.

camaroman's picture
camaroman
Joined:
May. 9, 2012 11:30 am

http://www.amazon.com/Buyout-America-Private-Destroying-American/dp/1591843693/ref=sr_1_20?s=books&ie=UTF8&qid=1338834377&sr=1-20

Read Chapter 6. Companies like Bain are a cancer that kills companies 3-5 years after Bain has made their money. Sorry they didn't mention this book on Fox News.

lovecraft
Joined:
May. 8, 2012 12:06 pm

In the first place, if you were in the banking business and were not aware of the value of debt in an accounting "bottom line," you must not have done much outside the teller window. Had banks been limited to the service finance provides to business and society instead of becoming "a business" where using bank assets to speculate to pay off bank owners (in the blind faith that 'growth' would also benefit depositers) became the smart way to go, your banking experience could have been a great critical perspective on "bad banking."

The language of "leveraged buyouts" and "junk bonds" was a close to the truth about this ideological nonsense. How did we think that this stuff would create wealth or flow down to lift all boats? How did this become the home for fiscal conservativism? My own answer, based on up close and personal observation, is that "economic man" knits together a bunch of American moral myths, but that it is permission to be mean and selfish and to keep any measure of charity well within one's own narrative control. Earned salvation knows nothing of grace. I did it, so can you knows no humility. The appeal of a cauterizing dogma to stop the pain of the world from getting to us is easy to appreciate. The peace of ignorant bliss is sought when the truth hurts and threatens.

Mr. Romney has shown no repentance about vulture capitalism. Mr. Pena's participation in Vespar Capital has not made Obama unable to differentiate between the legitimate venture capital business and the "equity game" even if we are in the early stages of fixing this serious issue. At this point, however, it is both the vulture record of Bain Capital and Mr. Romney's blithe confidence that this "business experience" has taught him how to make the American economy work that lead to opposition to him. We who see much more needed than has been done may agree that Mr. Pena is part of a business that ought to be illegal. It is tangential at best, and generally irrelevant to the Obama position on banking or to what is politically possible in the pathologies of DC.

You love to accuse others of hypcracy (sic). If you want to continue this, try correct spelling of key words. Hypocrisy.

Then, go to the mirror and take off the superficial make up of the character you are acting out here.

BTW CC, many companies were looted of their assets by the BAIN vultures, then loaded up with debt because that could make the accounting look good in the perfectly legal world of bookcooking, and then the cut backs and lack of needed investment took good companies into bankruptcy. Your naive belief that Bain performed emergency room services for businesses who were in bad shape needs re-education. Back to college for you.

drc2
Joined:
Apr. 26, 2012 12:15 pm

No wonder the banking industry, especially the too big to fail clan that participate in crap like this, is in trouble. Either that, or they are part of the scheme. Large loans are generally secured with collateral that has a value of 120% of the amount of the loan and certain principals (borrowers) are required to sign or guarantee the loan. And banks are ususally (at least in my experience) very reluctant to let another party assume the loan and release the original borrowers from liability.

Consider a home mortgage loan. Especially if for speculative purposes, the original borrower is reguired to pay 20% down to obtain financing. Then if he sells the property, unless hte new borrower obtains his own financing, the original borrower is still liable, even in instances where the bank let the second buyer assume the original loan the original borrower is still liable unless the bank agrees to realease him.

I would be willing to bet that small community banks do not practice this. That is why the too big crowd need to be allowed to go under or broken up into smaller regional bankss and seperated from their speculative and risky (even criminal) investment entities.

Still, no one has addressed the fact that Obama's natioanl campaign co-chairman, Frederico Pena, is a partner at Vespar Capital since 2000. Vespar practices vulture capitalism just like Bain.

Doesn't fit the agenda or meme of the leftist progressives here on TH so what they cannot speak to they IGNORE!!!

camaroman's picture
camaroman
Joined:
May. 9, 2012 11:30 am

I've always said Obama was a Wall Streeter.

lovecraft
Joined:
May. 8, 2012 12:06 pm

Anyone wishing to reside in the White House in the present context must pay some respect to the gods of Wall St. and get the bucks to compete. I don't know who the last non-Wall Streeter major party candidate would be. FDR gets the "I welcome their hatred" rhetoric, but many think the New Deal was great for capitalism and set a very high barrier against any real socialism. At least since WWII, no critic of Wall St. has been elected, and unless you think McGovern or another losing candidate took on Wall St., none has made it onto the ticket.

Take a deep breath 'camaroman.' I did answer you on Pena and Vespar. Obama's credentials for being President are not about his experience as a "vulture capitalist" because he did not do that sordid stuff. In the CU money gusher he opposed but could not prevent, Obama has some people from Wall St. who may even engage in some of the practices he has criticized and would see reformed. How sordid these stories might be and how they would compare with BAIN might be worth a long run on TV. Obama could establish himself clearly separate from the problem, unlike Romney.

Despite its empty content, I did answer your "charge." I know, it is another fact that gets in the way of your emotional ranting. Sorry.

drc2
Joined:
Apr. 26, 2012 12:15 pm

Quote drc2, "In the first place, if you were in the banking business and were not aware of the value of debt in an accounting "bottom line," you must not have done much outside the teller window."

I will excuse you, this time, from your ignorant attempt at insulting me, as you have no clue as to what my banking career entailed.

Again, drc2, " Mr. Pena's participation in Vespar Capital has not made Obama unable to differentiate between the legitimate venture capital business and the "equity game" even if we are in the early stages of fixing this serious issue.

Private equity/venture capitalism is bad I tell you! Bad! At least that’s what Obama and his Marxist Democrats have claimed. They smeared Newark Mayor Cory Booker for defending Mitt Romney’s time as a private equity manager at Bain Capital. Now here is some even more delicious irony from the Marxist Obama regime. Federico Pena who was once mayor of Denver is an Obama campaign co-chair. Federico Pena also just so happens to be a private equity manager whose firm has shut down several factories and laid off hundreds of people amid a stalled economy. You know, like what the Democrats accused Mitt Romney of doing at Bain? According to Daily Caller, Federico Pena is also a partner with Vestar Capital Partners. It’s not like Frederico Pena has been a partner recently. Pena has been with Vestar since the year 2000! I’d love to see how Obama, David Axelrod, Jim Messina, and all the press secretaries in the media spin this. Newt Gingrich ended up doing Mitt Romney a huge favor by dropping the Bain bomb during the primary. Obama and his collection of idiots took the Bain bomb and ran with it, and it’s completely backfired. Pena is responsible for laying off 1,000 works at Del Monte this month.

http://www.fireandreamitchell.com/2012/05/24/meet-obamas-national-co-chair-federico-pena-private-equity-manager-like-mitt-romney-was-at-bain-capital/

Sounds like Pena DOES at Vespar exactly what Romney DID at Bain. Obama is a hypocrit!!! You are a hypocrit by trying to excuse what Obama surrounds himself with as angels while potraying Romney as the devil. Obama and Romney piss through the same quill. But don't make another ignorant assumption here, I am not a Romney supporter nor will I vote for him.

Quote, " Your naive belief that Bain performed emergency room services for businesses who were in bad shape needs re-education. Back to college for you."

There you go again with another ignorant assumtion. I never said that I thought Bain a virtuous enitity.

Quote, "Obama could establish himself clearly separate from the problem, unlike Romney."

Then why hasn't he? Because he is a want to get re-elected hypocrit.

The truth is not empty content!!! Maybe an inconvenient fact you would like to ignore.

camaroman's picture
camaroman
Joined:
May. 9, 2012 11:30 am

Thom, when you discussed on Monday June 4 the abuse of the ballot-petition signature-gathering process, you did today what you've done before, telling what I suspect is a made-up tale about misrepresenting the contents of a rightwing-agenda petition or a candidate-nomination petition as a "legalize pot" petition in order to secure signatures from "someone who looks like they'd sign a legalize pot petition."

Well, in Minnesota the Grassroots Party and (for a time) the Legal Marijuana Now party have been collecting ballot petition signatures since 1986 for dozens and dozens of candidates who do support legalization of cannabis. We have never paid anyone either by the signature or by the hour to gather signatures. Always we have relied on volunteers, and we've collected hundreds of thousands of signatures. Today our candidate for Senate, Tim Davis, filed a petition with over 3,000 signatures, all collected within the last thirteen days (we have two calendar weeks of permitted petition time.) And I can tell you that when it comes to this issue, you can't reliably stereotype by appearance who will sign and who won't. I personally signed up a range of voters from 18-year-olds to at least one 85-year-old. A dreadlocked rasta-outfitted man literally walked across the street (twice!) to dodge where I was petitioning; other times, the most conformist-appearing paragons of suburban prosperity detoured to get to me!

In Minnesota, citizens don't have the right to place proposed legislation on the ballot by the petition initiative process. Therefore, to raise issues which the legislature won't touch, we have to do so indirectly, by nominating candidates who will use their campaigns as a platform for advocating those reforms.

Cannabis law reform is one such popular issue. I don't think a majority yet favors ending prohibition entirely, but a large minority does. Quite a few of those people actually are afraid to sign a petition and give their address! Thus fear of the government is another bad side-effect of prohibition--along with crime, corruption, loss of revenue, invasion of civil liberty, generalized disrespect for all laws, etc. etc. Two years ago I spent an hour talking with a woman, now a US citizen, who'd grown up in East Germany, who agreed with our positions, but who told me she felt as afraid of the US police as of the Stasi.

So it might not be as easy to secure signatures by impersonating a cannabis-cause supporter as you imagine it to would be. And I want to say that when our handful of geriatric hippie activists with clipboards heads out to collect ballot petition signatures in Minnesota, we do our best to explain the nature and purpose of the petition to the persons whose signatures we're soliciting. We don't misrepresent ourselves, and we are nothing if not ethical.

Oliver Steinberg's picture
Oliver Steinberg
Joined:
Jun. 4, 2012 1:10 pm

Wrong place to post the comment I just posted. I am totally new to this form of communication, and really I'm utterly at sea with computer technology and procedures. Maybe somebody can help out by moving my comment about ballot petitioning to a more appropriate place. Thanbk you!

Oliver Steinberg's picture
Oliver Steinberg
Joined:
Jun. 4, 2012 1:10 pm

As a response to Oliver Steinberg's comments, in a working democracy based on individual rights, some issues just don't get down to 'majority rule' (even though I think they should always get down to individual rights). For instance, the Supreme Court rulling of Loving vs. Virginia knocking down Virginia's law against interracial marriages (present since the Civil War) as being 'unconstitutional' (this time 'against the individual right to choose whom to marry') was done in the early 1960's at a time when the vast majority of Virginia voters (I heard it was over 90% in some areas and even a majority in black communities) were againt interracial marriages. There could be a similar argument against the ban on homosexual marriages even if 'the majority' doesn't like homosexual marriages. Same could go with marijuana use--or just any action that has not been definitively (and directly) shown to be a harm to society (and, from a ratiional viewpoint, certainly no more 'harm' that what is being allowed in society with tobacco and alcohol as 'acceptable drugs').

And, you're right, I'm not sure how Oliver Steinberg's comments has much to do with the discussion at hand. Especially considering that 'Vulture Captialism' pervades both parties--that, in a sports-like way, has people 'choosing sides' for teams when the action being offered 'follows the same game' no matter who is winning....more like 'divide and conquer' than truly help pick a directive course for our country's, our government's, and our corporations' actions....all that is guided by 'separate rules'--separate 'house rules' that just 'exist' without any 'informed consent' from the little people (the taxpaying consumer)....and the rest is just windowdressing and pom-pom waving....but, from my experiences on this board, many of the Kumbaya clan wouldn't have it any other way....after all, they have 'their team' in the game that they are rooting for....

Kerry's picture
Kerry
Joined:
Jul. 31, 2007 4:01 pm

camaroman, you still ignore the disparity between Obama's credentials and Romney's BAIN soaked resume. Even if Obama has to consort with equity or "vulture" capitalists in the larger political reality of the good, the bad and the ugly, he has not been a vulture nor does he defend vulturdom in rhetoric or policy.

Were we able to have sane conversations about controversial subjects, we could address the eggregious nature of Bain v. the overall pathology of what passes for market capitalism. I would go beyond the currently popular divide between legitimate venture capital and the vulture corruption by having the venture be about the value created rather than the profit reaped. I think capitalism needs to justify its liberties by more than "fiduciary" bottom lines. It can never only be about the money.

How that relates to Brother Bill's unfortunate aphorism, "it's the economy, stupid," depends upon what "an economy" means. The effect of Clinton's rhetoric has been to ratify "economic man" and to make other issues secondary. It is to see life backasswardly. But, Bill was playing on "their court" and played their game better than they did. He has also been relatively out of the way for Obama whose respect for Hillary he appreciates. Getting all of "it" down to "the economy" is not where the Progressive case shines. Economics is too technical to resonate if you tell it straight. On the other hand, the dogmas of phantom wealth are soul candy to those who are prone to believe in magic.

Venture capital ought to be mission inspired to add to the public social investments in prosperity and security called welfre. It ought to be about the value created rather than the profits to be gleaned. Otherwise, leave it to our duly elected representatives to waste in the politically useful paths of corruption for their people rather than their "investors." The old "boss" of the urban machine was a real "job creator." He also took care of the poor.

drc2
Joined:
Apr. 26, 2012 12:15 pm
Quote CollegeConservative:

But most would have failed without the intervention of Bain. No company failed because of bain.

Oh? Here's a list of examples over the years. Check the story on Dade (among others) and see the mechanics of how debt is infested in the target company.

Combad57's picture
Combad57
Joined:
May. 29, 2012 12:50 pm

Staples, radio sack and many other benefited from bain.

CollegeConservative's picture
CollegeConservative
Joined:
May. 4, 2012 2:22 pm

http://www.romneygekko.com/mitt/

Forgot to add link on previous post.

Combad57's picture
Combad57
Joined:
May. 29, 2012 12:50 pm

Need a vulture cyberneticist to extract the comment I mistakenly posted here about ballot petitioning. I just wanted to react to something said in passing on the raido show; the web site says not to send e-mails but do something else, and I landed here in Vultureville. I only wanted to scold brother Hartmann for trying to illustrate his concerns about certain abuses of the ballot petition process. He spoke of paid petitioners misrepresenting right-wing anti-tax measures as "pot legalization" measures and thereby easily securing signatures of "people who look like they'd sign a Legalize Pot petition."

Since I've circulated such petitions since 1986, and just finished another one today, and have never been paid a cent for it--nor has the Minnesota Grassroots Party ever to my knowledge paid for signatures--I can attest that there are easier ways to secure signatures than in the fashion he suggested. The so-called war on drugs is in fact a war on people, and it is a failed and destructive public policy which subverts our safety, our economy, our civil liberties, and our foreign policy, among other things. It deserves to be vigorously denounced and actively opposed. Those who work to end this modern Inquisition ought to be honored. But there was a tone of mockery in Thom's voice as if a petition for cannabis reform were a kind of joke or a bait for easily tricking gullible voters.

It may be that he has personal knowledge of such a bait-and-switch petitioning tactic. But I am as skeptical of that as Thom was of the notion that undocumented workers would be registering and voting. I speak from experience. Yes, there are many who wish to sign a cannabis reform petition---but there are also many who refuse to sign out of fear; which is not an impediment you would encounted, at least not to anywhere near as great an extent, with any other issue petition. So it wouldn't be very good bait for a bait-and-switch pitch.

Got that out of my system. For now.

Oliver Steinberg's picture
Oliver Steinberg
Joined:
Jun. 4, 2012 1:10 pm

Do you have a list of all the companies Bain has been involved with?

chuckle8's picture
chuckle8
Joined:
Jul. 31, 2007 4:01 pm

Obama has no creditials. He went from academia to community organizer to career politician. Obama gets lots of cover and excuses for his incompetancy from the left-leaning media and the progressive cult.The high point of his presidency came the day he took office. Since then, a majority of Americans has opposed virtually all his major policies and he has prevailed on several only because of executive orders.

Romney will be no better.

As Kerry put it, "Especially considering that 'Vulture Captialism' pervades both parties--that, in a sports-like way, has people 'choosing sides' for teams when the action being offered 'follows the same game' no matter who is winning....more like 'divide and conquer' than truly help pick a directive course for our country's, our government's, and our corporations' actions....all that is guided by 'separate rules'--separate 'house rules' that just 'exist' without any 'informed consent' from the little people (the taxpaying consumer)....and the rest is just windowdressing and pom-pom waving....but, from my experiences on this board, many of the Kumbaya clan wouldn't have it any other way....after all, they have 'their team' in the game that they are rooting for...."

camaroman's picture
camaroman
Joined:
May. 9, 2012 11:30 am

Staples was the company that Romney said no to twice. Finally, the other members of Bain overrode him and invested in Staples.

Staples put many well qualified workers out on the street and replaced them with incompetent morons. I remember before Staples there were office supply stores everywhere. There was stiff competition and the owners of those small office supply stores were well educated and informed. Staples destroyed all that.

chuckle8's picture
chuckle8
Joined:
Jul. 31, 2007 4:01 pm

I'm not following the OP here. Why should a company have to take on a certain level of risk for it to be legal? Bain didn't guarantee success. They were able to get companies to hire their consultants by gaining a great reputation.

Entitlement Society's picture
Entitlement Society
Joined:
Jun. 6, 2012 1:45 pm
Quote chuckle8:

Staples was the company that Romney said no to twice. Finally, the other members of Bain overrode him and invested in Staples.

Staples put many well qualified workers out on the street and replaced them with incompetent morons. I remember before Staples there were office supply stores everywhere. There was stiff competition and the owners of those small office supply stores were well educated and informed. Staples destroyed all that.

Staples made goods cheaper by buying in bulk. The quality in service may have gone down, but at least we have computers to research products beforehand.

Entitlement Society's picture
Entitlement Society
Joined:
Jun. 6, 2012 1:45 pm

Why do you think the cause of making goods cheaper was buying in bulk?

Why do you not think they were made cheaper because they were able to force the manufacturers to move to cheaper overseas labor markets?

It seems they were able to force manufacturers to move overseas because of the monopolistic type of power they created by M&A and buyouts.

I think another side-effect of this consolidation is a decrease in the number of choices available in the market. One can search to one's hearts content and not find things that were previously available. My depressing example is the powerpoint papemate pen.

chuckle8's picture
chuckle8
Joined:
Jul. 31, 2007 4:01 pm
Quote chuckle8:

Why do you think the cause of making goods cheaper was buying in bulk?

Why do you not think they were made cheaper because they were able to force the manufacturers to move to cheaper overseas labor markets?

It seems they were able to force manufacturers to move overseas because of the monopolistic type of power they created by M&A and buyouts.

I think another side-effect of this consolidation is a decrease in the number of choices available in the market. One can search to one's hearts content and not find things that were previously available. My depressing example is the powerpoint papemate pen.

Small business owners buy goods made in China too. A big factor that separates Walmart from the small business owner is that Walmart can buy 100,000 of one item at the fraction of the cost per item that the small business is buying 100 of.

Entitlement Society's picture
Entitlement Society
Joined:
Jun. 6, 2012 1:45 pm

The 'turn around' meme is BS. Many of the companies were returning over 5% ROI. By promising more than 5% they achieved the label of turnaround. The greater return was also a myth, and only the partners received it. The hollowed out companies left in the wake of bain were so leveraged they could not weather the next cyclical down period.

The former owner of the FL Marlins [after they won the world series] claimed he was losing money on the Marlins because he was only getting 8% profit. He sold, so I guess the new owner is a turnaround guy.

douglaslee's picture
douglaslee
Joined:
Jul. 31, 2007 4:01 pm

Why do you believe the goods were available from China? What I said was the goods were manufactured in the US unitl the monopolistic power told the manufacturer to move to China. Do you want examples?

chuckle8's picture
chuckle8
Joined:
Jul. 31, 2007 4:01 pm

Currently Chatting

Keystone would be way worse than we thought!

We already know that the Keystone XL pipeline is a disaster waiting to happen. But, it turns out that the impact of that tar sands pipeline could be even worse than we thought. According to a new study by the Stockholm Environmental Institute, Keystone could add four times more carbon pollution to our atmosphere than the State Department originally estimated.

Powered by Pressflow, an open source content management system