Romney Economics: Cheat Main Street

Leo Gerard — Tue, 29 May 2012 08:59:23 -0400

Mitt Romney made a boatload of money for himself and his fellow fat cats. No doubt about it. Billions. But he made it the way Americans hate most – Wall Street style wheeling and dealing.

Americans hate it because when all that scheming went bad, when the market collapsed, it was the 99 percent who footed the bill to bailout Wall Street. The same is true of Romney and Bain. When Bain bankrupted the companies it bought – and Bain did that shockingly often – workers and Main Street businesses paid the price.

Romney contends his money making as CEO of Bain qualifies him to be President of the United States. That’s true if Americans believe money should flow out of their pockets, out of the cash registers of Main Street shops and into the Swiss bank accounts of Romney and his 1 percenter cronies.

Here are some of Romney’s victims, Main Street businesses owed money by just one bankrupted Bain company, American Pad and Paper Co. (Ampad): Technical Coatings Laboratory, owed $125,191.20 and paid in bankruptcy $237.03; Services Plus Inc., owed $12,064.71, paid $22.84; Crown Vantage, owed $32,155.26, paid $60.89.

In the 15 years Romney ran Bain from 1984 to 1999, 22 percent of the companies it invested in went bankrupt or closed within eight years, according to a study by the Wall Street Journal.

In fact, according to the Wall Street Journal, the bulk – 70 percent – of the $2.5 billion Bain made for investors during that time came from just 10 deals. Four of those ended up in bankruptcy as well – killing jobs and jilting Main Street businesses. Despite that, Romney and the Bain investors fattened their Swiss bank accounts.

More Main Street victims: Lakeway Container Inc., owed $47,143.56 by Ampad, paid $89.26 in bankruptcy; Olympic Adhesives, owed $6,566, paid $12.43; American Chain and Gear, owed $505.54, paid 96 cents.

Bain’s handling of Ampad illustrates how the rich extract money from these deals and leave behind wounded workers and Main Street shops. Bain bought Ampad from Mead Corp. in 1992 and added SCM Office Supplies to the holdings two years later. Like many leveraged buyout deals, these were financed with loans secured by the purchased companies’ assets.

Within hours after buying SCM, Bain fired every one of its 350 workers in Marion, Ind. Bain, through Ampad, told the shocked and terrified workers they could apply for their former positions if they wanted them back – at less pay, fewer benefits and worse working conditions.

One way leveraged buyout firms like Bain make money is by taking it from workers – slashing their pay, benefits and pensions. This also makes companies look more productive, enabling buyout firms like Bain to make money on taking them public.

Bain bought SCM early in July, 1994. Within two months, the workers went out on strike, seeking restoration of some of their pay and benefits. Workers sought help from Romney, who rebuffed them as he was running for Ted Kennedy’s U.S. Senate seat. After losing that race, Romney returned to Bain, permanently closed the Marion plant and moved its equipment to other Ampad facilities.

More Main Street victims of Ampad bankruptcy: Green Bay Packaging Inc., owed $75,551.92, paid $137.37; Springfield Electric, owed $3,919.88, paid $7.23; American Coffee Break Service, owed $1,349.73, paid $2.56.

Through 1999, Bain continued to be the single largest shareholder in Ampad, and three Bain executives sat on its board of directors. Ampad struggled to meet the low price demands of big box retailers – like Staples, in which Bain had also invested and where Romney sat on the board of directors.

Ampad fell into bankruptcy in 2000. Companies besieged with debt -- as Ampad was -- because of leveraged buyouts often fail because they are too weakened to deal with normal business adversity.

More Main Street victims of Ampad bankruptcy: Economy Plumbing Co., owed $1,505.69, paid $2.85; Hohner Stitching Products, owed $2,095.76, paid $3.97; Mount Tom Box Co. Inc., owed $34,351.96, paid $65.04.

When Ampad went under, it owed $182.6 million to its suppliers across America. The bankruptcy left only $328,633 to pay nearly 1,300 unsecured creditors – that worked out to 10 cents for every $10 Ampad owed. That’s how a company liked Hometown Café & Catering, owed $600.60 by Ampad, got all of $1.14. And Hometown Café received that big fat check 11 years after Ampad filed for bankruptcy.

These Main Street shops and businesses are the heart of American communities, supporting the local United Way, Little League teams and Memorial Day parades. Debts never paid mean less money for them to hire their own workers, fewer dollars for them to contribute to their communities and a higher probability they’ll be forced into bankruptcy.

Bain invested $5 million in Ampad and took more than $100 million out, through numerous methods, including fees. That $100 million would have gone a long way toward paying the debts Ampad owed to Main Street businesses across the country. It wouldn’t be surprising if they felt a little like Romney and Bain robbed them at gunpoint.

But everything Bain did was legal. It’s Romney economics, working for the wealthy while double crossing Main Street.

On the Death of My Older Brother, Jeremy, and Ted Kennedy

Mike Elk — Wed, 26 Aug 2009 07:32:02 -0400

In the coming days, many great eulogies of Ted Kennedy will be written. Many will offer personal anecdotes in the coming days about what a great man he was. I do not intend to write one here.

I have no great anecdotes or personal stories to tell about how Ted Kennedy directly touched my life. I meet the man once briefly in passing while walking in the U.S. Capitol.

I did however lose an older brother, far too young, much as Senator Kennedy did. Anyone who has ever lost an older brother understands the intense pressure that the surviving younger brothers to live up to the legacies of their older brothers. Its an inescapable burden.

Not a day goes by that I don't think about my brother. I find myself wondering often what my brother would do if he were still alive. He died at the young age of twenty one of leukemia far before he could develop into the type of activist that I am today. He never got the chance to fight for working people the way that I so luckily have.

Ever since I have turned twenty-one, I have treated every day like it was one extra day and cherished it. It has made me want to get up in the morning and worker harder and be smarter because I feel so lucky to be alive. I feel that to not work as hard and diligently as I possibly could would be a disservice to my brother's legacy. My brother's legacy serves as a constant source of inspiration for some of the darkest hours and toughest fights.

Senator Kennedy cited his brother's legacy too in passing health care reform with a public option out of his committee earlier this year. In his statement he said:

This room is a special place. In this room, my two brothers declared their candidacy for the presidency. Today, the nation takes another major step toward reaching the goals to which they dedicated their careers, and for which they gave their lives. They strived, as I have tried to do, for a fairer and more just America -- a nation where every American could share fully in the promise of quality health care.

America has lost an older brother in the death of Ted Kennedy. We must all be fortunate that we are still alive. and around to fight for a public health insurance plan available for all Americans that Ted would have loved to fight for. We must work harder for the things that we believe in. If Ted were still alive today, he would be fighting like hell for the public health insurance option that he considered a fundamental human right.

Lets fight for my brother too. He died tragically and far too young. His death shocked my family. Fortunately, my father was a member of a union and the union provided us with excellent health care. In the closing days of my brother's life, we did not have to worry about medical bills. We spent them enjoying the company of my brother, Jeremy.

Every American deserves the same type of high quality health care that my brother, Jeremy, had in the closing days of his life.There is no reason why the richest country on the planet that people should have to suffer because their only crime was being too poor to afford quality health care.

Let's fight like hell for the public health insurance plan that Senator Kennedy so dearly fought for in the closing days of his life.

My deepest condolences to the friends and family of Senator Kennedy.

I hope that Ted is in heaven now finally reunited with his brothers as I hope to someday be reunited with mine.