A reader writes:
Kevin Roose's dismissal gets this all wrong. Sure, the FDIC gets no funding from the government – at least it's not supposed to. But everyone knows that if the FDIC runs short, the feds will step in (just like it did with Fannie and Freddie, and with FSLIC during the savings and loan crisis of the late 1980s). Bain did the same thing to the federal Pension Benefit Guaranty Corporation; they drained the pension funds of their takeover targets, then dumped the liabilities onto the PBGC when the targets went bust.
Roose misses the point about the bailout. What is important is that it runs contrary to the whole misguided notion that entrepreneurs are completely self-sufficient and create their success in a vacuum, while the government has no role to play in cultivating the conditions for that success by training workers, building infrastructure, regulating markets, and supporting businesses in times of distress. The Bain bailout highlights the untenable, shallow hypocrisy of the contemporary GOP's position.
I have been anxiously waiting for this topic to explode in the MSM. However, only a handful of online outlets have referred to it, and only perfunctorily.
Biden made an oblique reference to the report on Friday. Perhaps this is encouraging. Perhaps the Obama campaign is waiting until its own convention to highlight what seems to me a true scandal. But perhaps not.
Can nothing be done about this? I myself find this to be the most damning information I have heard to date about Romney's business practices and hypocrisy. I well understand that the FDIC is not taxpayer-funded, but is instead funded by premiums paid by member banks. I understand that there is no suggestion that either Bain or Romney acted illegally in their dealings with the FDIC. But the backdrop is the GOP's gleeful "We Built It" theme throughout their convention. "We Bilked It" seems more appropriate.
What would be Romney's response? If the federal government assists a failing company in order to save it, that's bad policy. But if a failing company bigfoots the government out of $10,000,000 so that it can distribute that cash to the company's officers, that's just good business. What??
I cannot understand how this story is spreading more. There certainly is a way to spin it for Romney: he came into a bad situation, used what leverage he had to force the creditors to the table, and ultimately reached a deal that was preferable for all to a liquidation.
The problem, of course, is that the leverage he had to bring his creditors to heel was just so damned self-interested. It was heads I win, tails you lose. If there was a provision in the loan docs allowing Bain to ritualistically light the money on fire, rather than give it to the creditors, that would have been better. Instead Mitt's threat was to pay his friend, and likely himself, high bonuses in order to drain the firm's cash – bonuses that they did not deserve of course – because their company was circling the drain!
It fits with the theme you have been hitting that Mitt never really has taken a "risk" regardless of his rhetoric about entrepreneurship, etc. He rigs the game so that he can't lose. And the $4 million "consulting fee" is just icing on the cake.