Skip to comments.Did You Know That "Vulture Capitalists" Are Real?
Posted on 01/12/2012 9:50:42 AM PST by pinochet
Rick Perry and Newt Gingrich have been unfair in attacking Romney as a Vulture Capitalist. Under Romney, Bain Capital invested funds to start Staples, which employs 90,000 people today. Romney and Bain created more jobs than they lost, which makes the accusations of Vulture Capitalism against them, to be unfair.: http://cnsnews.com/news/article/romney-compare-5-million-we-put-staples-530-million-obama-put-solyndra
But real Vulture Capitalists do in fact exist, in America, Europe, Latin America, and Asia. Those are people who never create significant numbers of jobs, or produce goods and services of any value, but make huge fortunes. This type of capitalism is not your Grandpa's old fashioned capitalism. We grew up believing that people became rich by producing goods and services that were needed by people, and that corporations made their money in a legal, honest, honorable, and ethical way.
Have you ever heard of "Vulture Funds"? These are new types of Hedge Funds, that profit from the misfortunes of failing companies and heavily indebted third world governments. When people seek to make money from the misfortunes of others, it is called "vulture investing". See: http://en.wikipedia.org/wiki/Vulture_fund
When a Vulture Fund takes over a failing company, they do not give a damn about improving the company's management, and returning it to profitability. They want to drive the company into bankruptcy as soon as possible, and make money from selling off the company's assets, such as real estate, vehicles, equipment, etc. They want the easy money that comes from selling company assets, and are not concerned about jobs, ethics, morals, goodness, America, adding value, humanity, decency, etc.
These funds buy up the debt of heavily indebted third world countries for pennies to the dollar, and try to collect much more money than they spent on buying the debt.
It takes a certain type of psychopathic personality to be a vulture capitalist. They can be likened to slave traders, brothel owners, human traffickers, drug dealers, pornographers, illegal arms dealers, traders in human organs, baby sellers, abortionists, and pirates. All the activities I listed are forms of capitalism, that specialize in making money from human misfortune. They exist in all continents, and such unethical businessmen are able to stay in business, by bribing politicians, judges, police officers, and prosecutors.
Here we go again. Another article tying Newt to the vulture capitalist quote. Newt never said that. Perry did. With all the lies out there no wonder the uniformed voting populace is voting the way they are.
OK. I stand corrected. It was Perry, not Newt, who used the term.
Romney is a liberal scum bag. He’s pro-abortion, pro-big government, pro-ObamaCare, believer in global warming, gun grabber, etc.
He’s Obama’s white half.
I believe someone like George Soros would be closer to fitting the bill than Romney.
Romney had nothing to do with the woes that put these companies in jeopardy.
Soros on the other hand buys options based on the failure of a currency or other entity, then uses political power to cause their failure so he can harvest the booty.
It is very true that such firms can through poor judgment or greed endanger the long term viability of the business based on short term gains and incurring too much long term debt.
The left would name this Vulture capital. I don't know what the right calls it, I think they just don't want to acknowledge it exists.
It would take me months of research, and access to Bain’s proforma reports, board minutes, etc etc to know for sure whether some of the controversial claims have any basis in fact.
What I do know, is that there is sufficient fodder to allow the Dems to turn Bain into such a negative that Romney will be darn near unelectable. His responses so far, have been less than stellar, and he's had plenty of time to formulate a convincing rebuttal. After all, Kennedy used Bain to help beat him in the run for the Senate.
The Pubbies establishment has not selected a winning candidate. I am not sure that they even want to win the presidency, if this man is the best candidate they can provide.
Read about how the top tier of Vulture capitalist work. Romnuts is just a lowerer level VC. With dreams of becoming Number 1 with a Presidency on his resume. MONEY, MONEY MONEY!!!!!
Very interesting article.
Carl Icahn is one of Wall Street’s most successful figures. In the 1980s, this corporate raider - using Drexel Burnham’s junk bonds - became known as a vulture capitalist, taking positions in public corporations and initially demanding extreme changes in both their corporate leadership and management styles. Often, targets paid him “greenmail” money, with the stipulation that he would step away from his target. By the end of the 20th century, his reputation changed and he was starting to be described as a shareholder activist.
“These funds buy up the debt of heavily indebted third world countries for pennies to the dollar, and try to collect much more money than they spent on buying the debt.”
Shocking! They try to buy low and sell high.
Go here: http://www.webcasts.com/kingofbain/
See if you think that Mitt Romney can withstand that video in the hands of a billion dollar campaign by Barack Obama.
Add to that Romney’s record in elections: he tends to lose.
The truth is that the Godfather actually had two businesses. One was above board. He sold olive oil. It looked good in the public eye. He imported, he sold, he made money.
Under the surface, though, he became wealthy as a mafia don.
A Vulture Capitalist will ensure that the vast majority of his deals are clean and on the up and up. A few of them, though, will be real killings, the time when the vulture shows up.
Romney protected Bain using various stock sales, holding schemes, and false valuations to avoid liability to Bain for the bankruptcies that followed the vulture activities. But the scheme was the same: buy a company, run up huge, monstrous debt, siphon that money to Bain, and then back out of the deal with zero liability to Bain.
In a personal bankruptcy, if you tried playing transfer schemes to limit your liability that way, you’d be held in contempt of court.
But using various, obscure law, Romney was able to come out clean.
Imagine what must be behind the mask of this man. Imagine that being our president. Now imagine if a presidential run could actually another part of an insider scheme.
“They want to drive the company into bankruptcy as soon as possible, and make money from selling off the company’s assets, such as real estate, vehicles, equipment, etc. They want the easy money that comes from selling company assets, and are not concerned about jobs, ethics, morals, goodness, America, adding value, humanity, decency, etc. “
Again, I contend that there is no good research journalism going on out there. I’ve heard that initially Bain did step in to assist companies like Staples, Burger King, Dominos etc., but later when it was clear that the big money and easy money could be accrued with the vulture approach, that’s what they did.
This is not illegal, but says a lot about the man and his character in my opinion.
But, apart from that what did Romney do with his money? Was ther inside trading going on, I’m sure there was...etc etc. Who benefitted from Bain?
Show us your tax return, Mitt.
Yeah. We need to be very careful about labeling anyone who buys distressed debt or companies as a “vulture.” Its a high risk, high reward business, and there is nothing inherently immoral about buying debt for pennies on the dollar and the trying to maximize your return.
If these guys weren’t buying the debt, NO ONE would be buying it.
Further, if a company is worth more when sold off as pieces, then why should it continue to operate as a going concern? It sounds like the capital tied up in such an enterprise would be better deployed somewhere more productive.
This isn’t to say all activities of such enterprises are above criticism, but to state that any and all so called vulture funds are inherently evil is flat out wrong. Like someone else stated in this thread, I’d have to do more research on Bain before I made a judgment, but the mere fact that they may have broken up a couple of distressed companies means absolutely nothing to me.
Slogan warriors fool the stupid once again.
“Vulture Capitalism” doesn’t exist. Capitalism is Capitalism. You don’t get to pick and choose unless you want to endorse incremental socialism.
The original “vulture capitalist” is George Soros. But I don’t hear his name being tossed about on the news.
Still, buying up bad debt is not inherently evil. It is high risk and if you’re able to do it and make a profit then while you might not have saved the company, you probably saved the bank that was stuck holding the debt.
You could see it as akin to flipping houses. If you bought a repo from the bank for a fraction of its worth, and then turn it around and make money on it, the guy who lost his house is still without a house. But the bank was stuck holding the debt; you’ve relieved them of a liability at some risk to yourself.
Of course, Vulture capitalism at Bain Vulture Capital was real and in some instances very unethical, slimy, and costly to American taxpayers.
BUT WHY were American taxpayers forced to pay 100% for Willards business incompetence and greed? Bain couldn’t chip in just a little? Perhaps one less yacht or private jet in the fleet at Bain.
Workers were denied the severance pay and health insurance theyd been promised, and their pension benefits were cut..
Whats more, a FEDERAL GOVERNMENT insurance agency had to PONY UP $44 MILLION TO BAIL OUT the companys underfunded pension plan.
Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees.
The Wall Street Journal analysis this week was devastating for Willard the Vulture/Lib at Bain..
Adding insult to injury, Bain would hide its profits in tax havens, not even paying the rate it was supposed to on the profits it made laying off workers.
Lets see how the taxpayers feel about bailing out these companies pension funds and receiving no tax money back from Bain. Lets let the people decide what they think of bailing out Romney.
Bottom line again: Why should American taxpayers have to be forced to pay for Willards business incompetence and greed?
“It would take me months of research, and access to Bains proforma reports, board minutes, etc etc to know for sure whether some of the controversial claims have any basis in fact.”
I think there’s a distinction from what I’ve read that what you say may be true, but the Leveraged Buyout operation took place later rather than earlier. Perhaps Bain could reap bigger profits and fees and do it easier pillaging these companies, but how about the pensions being ransacked, (money going to BAin) andthe taxpayers paying the bill?
the only way you cut through this as you say, is if there is or was some insider at Bain who might come forth and speak, but I wouldn’t be surprised that the upper management were all in cahoots, either through religion, marriage etc.
In summary, I’m surprised that we haven’t heard people coming forth either who worked at Bain or from people who did business with BAin.
I think this will come out in the end.
Following all the threads lately on FreeRepublic, I thought I was accidentally on democratic underground.
This visceral hatred of venture capitalists misses one big point. The target can say no. That is right, the target (i.e., the distressed company) who did a lousy job with the company and now needs more money - be it through bankruptcy or by giving up a big portion of the company to a hedge fund - can simply say no to the investor.
In this country, you can't just take over companies - oh, you can buy big percentages of public companies, a la Carl Icahn (and disclose when it is over 5%),but then you have to follow very specific rules to accomplish anything.
Another thing - there are other capitalist competing for all these deals. The one with the most money to invest usually wins.
If investors can just go out and sell off pieces of companies and get rich, a bunch of people would do just that. That isn't how it works! The current owners usually have to run the company in the proverbial ditch before the investors are sought. Then they compete for the deal. Anyone have a problem with that?
If Goldman Sachs and JP Morgan want Romney in, nothing Obama says is going to matter. If they prefer to stay with Obama, nothing Romney says is going to matter. But they main remain neutral and let the public pick the one they think is prettier - they win either way. :)
‘Vulture fund’ investors are not in any way like slave traders. They are looking for undervalued assets to invest in, and it’s long been a staple of investing that when companies are in good shape they tend to get overvalued by the market, and when they are in bad shape, they tend to get undervalued by the market. Nothing wrong with buying up in that situation, that’s what stabilizes and recognizes actual value in the market.
The ‘vulture capitalism’ term applied to the LBO guys like Bain—not counting the VC portion of their business—was a trend whereby they were buying up underperforming companies, stripping them of assets, and then selling them off in a condition in which they were overleveraged and often soon ended up failing. Lots of money to be made by the Romney/Bain types who were doing it at the time despite the too frequent bad eventual outcomes for the firms.
Mixing together the new hiring from Bain’s VC successes doesn’t mean that they weren’t practicing classic vulture capitalism back when it was in vogue—they were.
“The truth is that the Godfather actually had two businesses. One was above board. He sold olive oil. It looked good in the public eye. He imported, he sold, he made money.”
Well it did come out in the race against Kennedy, but of course that was not national. I wasn’t following 2008 as closely, so I don’t know whether it came out then or not.
I think I heard Rush say today, that it was not used in 2008. While Newt and Perry may have phrased it clumsily, I am glad that the issue has been brought forward to allow a proper vetting.
I wish someone in the campaigns would check his actual job creation record in Massachusetts to see if he knows how to translate his private sector experience into public policies that encourage job creation. I did read here that is was less than stellar, but so far I don’t have articles or stats to look at.
Capitalism has evolved into making the most money. Putting money before country and everything else is its current credo. No matter if it’s company chopshops or exporting jobs. Their citizen flag is the dollar. Bankers no longer jump out of windows because they feel remorse. Greed is good. Making money is the summun bonum. Money is now speech. The guy that can accumulate the most speech is President.
it means the company is failing, and that the other private-equity funds who do undertake turnarounds aren't interested in it. Vulture funds don't have a restricted market where only they can bid on a company.
Is it the money they make that's bothering you? Bankruptcy trustees do exactly the same thing, but they get paid a fixed fee per hour. It's lucrative work, but I suppose getting compensated by the hour whitewashes it for you.
Is it the fact that they're cynics at heart? Well, they do deal with companies that are failing.
“Defenders of the capitalist system “
As opposed to what, the Communist system of government theft and slavery??? We have enough of that crap polluting our system already.
Where do you want capital allocated? In failing inefficient firms or in the Apples and Ciscos of the future? Well, if you want the latter, and any pro-free market conservative should, then we need companies like Bain to accomplish the job and when they do they should be rewarded according to the value they create or liberate. Please stop these dumb-kin demagogic acts on this highly skilled and valuable work.
Stuart Varney covered this on FOX.
If you were to try to separate (hide) assets prior to a bankruptcy, you would be cited for contempt of court.
However, to do so in a vulture capitalist bankruptcy is a matter of smoke and mirrors.
Just ask yourself this: How does Bain Capital take all the money out of a company it owns, have the company file bankruptcy, yet not have to pay out of Bain’s assets the money owed by the bankrupt company owned by Bain to the creditors of that company? Pure legal manipulation via corporate, appraisal, and bankruptcy laws.
You as an individual could not get away with that.
So Newt is right. Something unusual is taking place. And it makes sense to have it explained. It looks like smoke, and where there’s smoke.....
If a transaction like that had tried being pulled off in the Founder era, the “entrepreneurs” would have been imprisoned or hung.
You can be a Vulture Capitalist too: watch “Storage Wars” on TV and see how it’s done.
How about vulture communists?
As a matter of bias, I give people the benefit of the doubt (including Romney, despite the fact that I don't like him). But I keep hearing about stripping assets ahead of a bankruptcy, and going after retirement funds. Both of these would strike me as unethical if not criminal. So Romney needs to clarify or get out of the race.
I like Gingrich and don't like Romney just as my base position. I don't assume investors are automatically evil. But what you are describing sounds blatantly wrong.
Bain created companies...some Staples, DoubleClick, Aspect Development, Shopping.com, Taleo Corporation, SolarWinds, Brontes Technologies, m-Qube, ProfitLogic, Network Intelligence and MinuteClinic. Bain also acquired a 50% interest in Bombardier Inc.'s recreational products division, along with the Bombardier family and the Caisse de dépôt et placement du Québec, and created Bombardier Recreational Products or BRP.
An interresting footnote is this... In early 2001, Bain purchasd a 30% stake in Huntsman Corporation, a leading chemical company. Bain's $600 million investment in Huntsman has been noted as an interesting footnote in the 2012 Republican Presidential nomination process since Mitt Romney's former firm (he had left Bain in 1999) acquired the company controlled by the father of another candidate Jon Huntsman (Huntsman was an executive of the company at that time).
Monies deposited in a fund intended to be used for payments under a defined pension benefits plan cannot be “raided,” so far as I know. Strict laws apply to these things. Those funds are basically deferred compensation and can't be touched except by the pension fund administrator.
When the media says that people “lost” their pensions they are actually saying that workers did not receive the level of pension benefits they expected to receive. But the ability of the former employer to pay those benefits was in large part based on their on-going existence as a profitable operating company. When they fail they go out of existence and can no longer make contributions toward pensions.
Hence, workers don't' receive full pensions. This would have happened irrespective of the PE company's attempt to resuscitate the firm and turn it around. If anything, the PE company was the last chance the employees had of realizing the full pension benefits they thought they had coming.
It is my understanding that when a firm is in bankruptcy, the presiding judge weighs the competing claims of creditors and employees. Some residual funds will be allocated toward employee pensions, but pensions do not have an exclusive claim on available funds, nor should they.
The creditors are due a reasonable recovery on their unpaid debts. Note, that in the GM and Chrysler bailouts the government intervened and not only shut out unsecured creditors to the benefit of pensioners but secured creditors as well. That isn't the kind of action to contributes to capital formation in America. Yes, PE companies will sell assets prior to bankruptcy and use the funds to pay dividends to investors. Generally, there is nothing wrong with that. If it is clearly done to screw creditors it can be considered a fraudulent conveyance. If the bankruptcy court determines it as such, the funds can be clawed back.
But a PE firm wouldn't get much business from struggling companies or raise many funds from pension fund managers if they were in the habit of engaging in fraudulent conveyances. If anyone led you to believe this is a common practice, you were sadly deceived.
Bain’s reputation is very good. They wouldn't have earned the level of success and reputation that they have if they engaged in those sorts of activities. Like any company engaging in the free market, you won't get many customers if you frequently defraud them.
If you had properly labeled this thread as the Romney Booster article that it is, it would have been zotted.
Taxpayers are out $44 million, Bain takes $12 million profit. Nope nothing seems wrong with that deal at all, just business as usual.
The fix is in, get used to it. Bolten endorsed Romney last night.
Oh, is that the same FOX that is in the tank for Romney, where the Bloviator nightly tells us Romney is the only one that can win, and even when they have any of the minor candidates on they always preface their appearance with struggling, can't possibly win, blah, blah, blah.
O'reilly savaged Santorum after his win, in Iowa, and he did win, but Romney gets to brag.
Is that the best you can do?
That you don’t care for FOX is irrelevant to me. You do not get to determine which television or radio programming that I listen to.
Stuart Varney did explain in detail and he didn’t just hit the talking points.
Yes well your hero Icahn took over TWA a company a life-long friend worked for all of her career. 1 st thing he did was to get the union to agree to a pay cut. And other items.
Then he decided a merger with American was a great idea.
Ofcourse the TWA employees were guaranteed their seniority and they were even going to be paid at the higher AMR salaries. Of course they had JOB Security.
WITHIN A YEAR ALL OF THE TWA EMPLOYEES WERE FURLOUGHED.
THE BIG LIE OF SENORITY WAS A FLAT OUT LIE.
Yeah a lying vulture capitalist comes in and suckers companies to get in bed with them and guess what....THEY GET RAPED.
Save your admiration for the vultures and vampires that lurk in New York, D.C. and Chicago.
When did MONEY become more important to Americans than families and hard working middle America. Only Libertarians and Commie/Socialist/Progressives believe humans are expendable.
Honor is dead in America.
Stuart is very flexible with his support. FOX news is unwatchable without recording it and being able to skip 75% of the cr@p they are currently shilling.
Having said that there is nothing that that even closely resembles real news on any of the other channels.
We used to laugh at the giant pictures of Lenin and Stalin that were hung all over Russia, but I don't think a single day has passed since the last election, that Zero has not appeared on TV. He is almost always addressed as President Zero, unlike poor GW who was almost always addressed as The President, or Mr. Bush. Cool propaganda tricks that most people don't notice.
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