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Gayle in MD
06-25-2012, 06:35 PM
The story behind Romney and the junk bond king
Deal with Michael Milken in the late ’80s transformed Bain Capital and the future candidate’s business career
By Michael Kranish and Beth Healy


It was at the height of the 1980s buyout boom when Mitt Romney went in search of $300 million to finance one of the most lucrative deals he would ever manage. The man who would help provide the money was none other than the famed junk-bond king Michael Milken. Therein lies one of the most revealing stories of Romney’s Bain Capital career, showing how he pivoted from being a relatively cautious investor to risking his reputation for a big payoff.





Mitt and the junk bond king
June 24, 2012|Michael Kranish and Beth Healy, Globe Staff
It was at the height of the 1980s buyout boom when Mitt Romney went in search of $300 million to finance one of the most lucrative deals he would ever manage. The man who would help provide the money was none other than the famed junk-bond king Michael Milken.

What transpired would become not just one of the most profitable leveraged buyouts of the era, but also one of the most revealing stories of Romney’s Bain Capital career. It showed how he pivoted from being a relatively cautious investor to risking his reputation for a big payoff. It is one that Romney has rarely, if ever, mentioned in his two bids for the presidency, perhaps because the Houston-based department store chain that Bain assembled later went into bankruptcy.



But what distinguishes this deal from the nearly 100 others that Romney did over a 15-year period was his close work with Milken’s firm, Drexel Burnham Lambert Inc. At the time of the deal, it was widely known that Milken and his company were under federal investigation, yet Romney decided to go ahead with the deal because Drexel had a unique ability to sell high-risk, high-yield debt instruments, known as “junk bonds.”

The Obama campaign has criticized the deal as showing Romney’s eagerness to make a “profit at any cost,” because workers lost jobs, and challenged Romney’s assertion that his business background best prepares him for the presidency. Romney, meanwhile, once referred to the deal as emanating from “the glorious days of Drexel Burnham,” saying, “it was fun while it lasted,” in a little-noticed interview with American Banker magazine.

The “glorious” part, for Romney at least, was that he used junk-bond financing to turn a $10 million investment into a $175 million profit for himself, his partners, and his investors. It marked a turning point for Romney, according to Marc Wolpow, a former Drexel employee who was involved in the deal and later was hired by Romney to work at Bain Capital.

“Mitt, I think, spent his life balanced between fear and greed,” Wolpow said. “He knew that he had to make a lot of money to launch his political career. It’s very hard to make a lot of money without taking some kind of reputational risk along the way. It’s just hard to do. It doesn’t mean you have to do anything illegal or immoral, but you often have to take reputational risk to make money.”

So it was that Romney decided to rely on a man and a company in the thick of one of the most intensive investigations ever undertaken by the Securities and Exchange Commission.

It happened in 1988, the fourth year of Bain Capital’s existence. Romney was shifting his focus from venture capital, funding younger companies, to buying larger, established businesses, which sometimes were troubled.



http://digg.com/newsbar/Politics/shady_f..._michael_milken (http://digg.com/newsbar/Politics/shady_finances_romney_s_deal_with_convicted_junk_b ond_king_michael_milken)


<span style="color: #990000"> <span style='font-size: 14pt'>OMG what we have here is another disturbed fellow who is out to out-do his Da Da, who failed to win the presidency!

Hmmm, didn't work out very well that last time, with Little Bushy, now did it!

"Romney campaign officials repeatedly declined requests to comment on Bain’s record of investing in outsourcing firms during the Romney era."

Oh yeah...I guess so!

I'm sure all the "White" American voters who some people are saying are in the bag for Romney, Americans who people like Mitt Romney, threw out of work, and then deniied them their health care and retirement, will be knocking one another down to get in there to vote for Mitsey and his Magic Panties!

G.</span></span> /forums/images/%%GRAEMLIN_URL%%/crazy.gif

Gayle in MD
06-26-2012, 05:09 AM
<span style="color: #990000"> shuuuush. Don't wake up the righties! </span>

/forums/images/%%GRAEMLIN_URL%%/grin.gif

Soflasnapper
06-26-2012, 09:51 AM
Meh. I'm unimpressed by this story line.

Those junk bonds financing things were a two-edged sword, not all bad. In full disclosure, maybe I'm biased, as our company sought out Drexel's financing of our going public around that time for big money (the deal never happened for other reasons).

Drexel's criminality was not the junk bonds' financing idea, but collusion with other major Wall Street figures in the insider trading as is mentioned here. Ivan Boesky, maybe Carl Icahn, and other major takeover pirates colluded with Milken to unlawfully get extra profits from insider knowledge.

That does NOT taint individual companies that went to that firm to finance deals, except as side splatter.

Take Bank of America, for instance. They, along with their purchased subsidiary CountryWide Financial, engaged in a lot of abuses in mortgage lending and subsequently in foreclosure rackets.

So, should companies refuse to use them to finance entirely different deals, on account of their various legal issues? Not in my opinion. Using their lending facilities does not involve the borrower or leveraged buyout party in whatever other crimes they have committed in other areas of their business.

Gayle in MD
06-26-2012, 03:18 PM
My take of the article was that it was more about the psychology of Mitt Romney, than an indictment against Drexal.

Given his intention, way back then, to run for President, eventually, and his refusal to answer any questions about his so called, Job Creation, now, which is apparently his main thrust of his campaign, hence, the article.

this article, IMO, points to his making some pretty noticeable decisions, back then, in his quest to get into the White House, later on, which could very negatively impact his reputation, later one, unless of course, he continues to refuse to talk about anything specific that he did at Bain. /forums/images/%%GRAEMLIN_URL%%/wink.gif

If one isn't planning to eventually run for president, that changes the story quite a bit, IMO.

Taking a few paragraphs out of the story, without separating them by quotes:

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Therein lies one of the most revealing stories of Romney’s Bain Capital career, showing how he pivoted from being a relatively cautious investor to risking his reputation for a big payoff.


What transpired would become not just one of the most profitable leveraged buyouts of the era, but also one of the most revealing stories of Romney’s Bain Capital career. It showed how he pivoted from being a relatively cautious investor to risking his reputation for a big payoff. <span style='font-size: 14pt'>It is one that Romney has rarely, if ever, mentioned in his two bids for the presidency, perhaps because the Houston-based department store chain that Bain assembled later went into bankruptcy.</span>

At the time of the deal, it was widely known that Milken and his company were under federal investigation, yet Romney decided to go ahead with the deal because Drexel had a unique ability to sell high-risk, high-yield debt instruments, known as “junk bonds.”

It marked a turning point for Romney, according to Marc Wolpow, a former Drexel employee who was involved in the deal and later was hired by Romney to work at Bain Capital.
<span style='font-size: 14pt'>
“Mitt, I think, spent his life balanced between fear and greed,” </span>Wolpow said.

<span style='font-size: 14pt'>“He knew that he had to make a lot of money to launch his political career. </span> It’s very hard to make a lot of money without taking some kind of reputational risk along the way. It’s just hard to do. It doesn’t mean you have to do anything illegal or immoral, but you often have to take reputational risk to make money.”

<span style='font-size: 14pt'>So it was that Romney decided to rely on a man and a company in the thick of one of the most intensive investigations ever undertaken by the Securities and Exchange Commission.</span>
</div></div>

G.

Soflasnapper
06-26-2012, 06:53 PM
You have to be of a certain age to remember Milken, which I am, and I do remember him well.

You'd also have to have been paying attention at that time, as few even then were. I followed business and politics closely then.

I'd guess for this to impact Romney now it would have to be money he took from Ochoa or another Medellin Cartel guy, obviously knowing it was blood and drug money.

As an insight to him, it's detailed, but still a bit thin.

The deal itself seems ok, one of his better ones, with the bitter ending not completely ruining the company, and coming after considerable success and the end of Bain control. (They even came in later to buy that minority stake.)

I think his and Bain's looting of the pension funds in other cases was a far greater sin, so to speak, and far more revealing of his character. After Bain promised to keep those pensions in place, they underfunded them, and while the citizens of the US through pension guarantee insurance paid out $44 million to give those people something, they still lost millions as that coverage didn't make them whole.

So, instead of an association with a future (but as of then, accused) felon, he acted the thief himself, constructively.

Gayle in MD
06-26-2012, 07:08 PM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">I think his and Bain's looting of the pension funds in other cases was a far greater sin, so to speak, and far more revealing of his character. After Bain promised to keep those pensions in place, they underfunded them, and while the citizens of the US through pension guarantee insurance paid out $44 million to give those people something, they still lost millions as that coverage didn't make them whole.

So, instead of an association with a future (but as of then, accused) felon, he acted the thief himself, constructively </div></div>

<span style="color: #990000">I certainly agree with that!

At any rate, he isn't going to be able to continue to stonewall relevant questions about his thieving greed, and expect to win an election by just continuously bashing and lying about the president.

The press is surely getting fed up with his stonewalling, according to what I'm hearing and reading.

BTW, did you hear that even Rupert Murdoch has been tweeting complaints about Romney's non responses, and endless rhetoric? /forums/images/%%GRAEMLIN_URL%%/shocked.gif

G. </span> /forums/images/%%GRAEMLIN_URL%%/grin.gif

Soflasnapper
06-27-2012, 09:39 AM
If he loses Fox, look out!

Murdoch is a flexible ideologue (hosted a fund raiser for Hillary's Senate campaign).

He'll trim his losses, and go with the perceived winner, and maybe this is a harbinger of Romney's inability to begin to seal the deal.

Even in the 'Obama losing whites' thread, it was mentioned, his losses in that demo have YET to go Romney's way so far.

Given the sh!tstorm thrown at Obama, it is amazing he isn't double digits down in polling to Romney.

Gayle in MD
06-27-2012, 09:49 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Soflasnapper</div><div class="ubbcode-body">If he loses Fox, look out!

Murdoch is a flexible ideologue (hosted a fund raiser for Hillary's Senate campaign).

He'll trim his losses, and go with the perceived winner, and maybe this is a harbinger of Romney's inability to begin to seal the deal.

Even in the 'Obama losing whites' thread, it was mentioned, his losses in that demo have YET to go Romney's way so far.

Given the sh!tstorm thrown at Obama, it is amazing he isn't double digits down in polling to Romney. </div></div>

I have a new thread up on the results of the Quinnipiac polling, BTW, and the President is gaining, and leading Romney in Pennsyvznia, Florida AND Ohio.

Registered voter numbers are very good.

He leads in the young vote, among women, and among Latinos, as well. /forums/images/%%GRAEMLIN_URL%%/laugh.gif

G.

eg8r
06-27-2012, 04:58 PM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">At any rate, he isn't going to be able to continue to stonewall relevant questions about his thieving greed</div></div>When did he become a thief?

eg8r