The Deeper Bain

TPM Reader JL thinks it’s only the tip of the iceberg …

I am of course delighted to see Mitt Romney’s tenure at Bain coming into focus.

But I think the focus on jobs, as potent as it is, may distract from an even more problematic aspect of the private equity business. And I think the Obama campaign, or the DNC, or the Dem Super PACs, or all three would be wise to focus on it. Maybe not now, but eventually. Yes, it’s important, perhaps critical to put the lie to the image of Mitt Romney as a job creator. But perhaps more important is the idea that Mitt has spent his career playing with other people’s money.

I think what bothers people most about Wall Street is their perception that it’s a rigged game. (I think this is less true than the average person believes, but no matter … it’s true enough.) Everyone remembers the bank CEOs who gambled recklessly, lost, and still walked away with tens of millions. No industry represents this heads I win, tails you lose business model better than private equity. If Mitt becomes known as a guy who spent his career playing with other people’s money, that’s just toxic. It allows Obama and the Dems to draw a straight line from Mitt Romney to the root causes of the financial crisis.

If I were an enterprising sort, with a staff of investigative reporters at my disposal, here’s what I might do. Take all the Bain-funded firms that the WSJ identified as having gone bankrupt in the eight years post-Bain involvement. Then try to figure out how much money Bain Capital (as opposed to Bain’s funds) made on those companies–their management fees, less costs, less any capital losses. That’s a pretty challenging assignment, and I’m not even sure it’s doable. But if you could with some degree of confidence say that Bain made hundreds of millions of dollars on these companies that went bankrupt, that would be devastating.