Reuters reports in "Special report: Romney's steel skeleton in the Bain closet" that Romney's Bain Capital took a $44 million government bailout in 2002 from the federal U.S. Pension Benefit Guaranty Corp after they determined that Bain had underfunded its steel mill's pension by $44 million. Workers were denied the severance pay and health insurance they’d been promised, and their pension benefits were cut by as much as $400 a month. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees.
"Lately, Bain founder and GOP presidential candidate Mitt Romney has found himself in a spirited defense of the private equity industry, doing all he can to spin decades of data which confirm, without failure, that PE Leveraged Buy Outs are nothing but "efficiency maximizing" transactions whose only goal is the "maximization" of EBITDA in the pursuit of dividend recap deals, IPOs or outright sales, while loading up the company with untenable amounts of leverage. All this with a 3-5 year investment horizon, which ignores the long-term viability of a company and seeks to streamline (read fire as many as possible) operations as quickly as possible in the goal of maximizing short-term returns. We wish him luck in his endeavor."Shame we have so many wannabe Capitalistas here at FR and elsewhere, who adamantly defend this kind of shuck and jive financial paper shuffling as exemplary acts of free-market enterprise.