Who Built It?

In our September 15 issue, Lou Dubose reports on Mitt Romney’s vulture capitalism at Bain Capital. The company, where Romney spent much of his business career, made its own way—with the help of some crucial federal funding.

GS Industries operated a steel mill in Kansas City, Missouri. Bain Capital acquired the company in 1993 with an $8.3 million investment, according to The Boston Globe. One year later, GS borrowed $125 million to pay off existing debt, modernize the mill, and pay $36.1 million to Bain Capital—four times what Bain had paid for the company.

When GS went bankrupt, closed its plant, and dismissed all its employees, its pension fund couldn’t meet its obligations, according to a Pension Benefit Guaranty Corporation press release.

After the GS pension funds shut down in June 2005, the PBGC had to cover “about $44 million” in benefits for retired workers. “The PBGC insurance will protect the basic pension benefits of GS Industries workers,” read the federal fund’s August 2005 press release. The PBGC is a federal agency funded by insurance premiums paid by the companies subscribing to its services.

Bain got another federal bailout in 1991 when one of its holdings, the Bank of New England, went under and was seized by federal regulators, according to reporting in the Globe.

When the Bank of New England failed, Bain & Co. was responsible for $38 million of its loans. In 1993, while Romney was CEO of Bain & Co., the company cut a deal with the Federal Deposit Insurance Corporation to shave $10 million off Bain’s financial liability, shifting that amount onto FDIC balance sheets.