Romney, Bain Capital, and Indiana
On Monday, the Obama campaign launched its latest installment on Mitt Romney’s history as a corporate raider, this time targeting Bain Capital’s takeover of SCM Office Supplies in Marion, IN.
In addition to the video, there’s a brief slideshow about Ampad on the Obama campaign’s “Romney Economics” page.
Obama’s ad mirrors a similar, successful campaign in the 1994 Massachusetts Senate race between Romney and Ted Kennedy. (Yes, Romney has been running for office for that long.)
Mitt Romney’s Bain Capital bought Ampad (aka American Pad & Paper) for $5 million in 1992, while the company took on $35 million in debt to pay for the takeover. In 1994, Ampad bought SCM Office Supplies and fired all the workers. Some workers were able to re-apply for their old jobs at a fraction of their wages, but the plant was closed for good within a year.
Ampad itself would go bankrupt by 2000, due to the massive amounts of debt (~ $400 million) piled up under the direction of Bain Capital. By that time, Romney and Bain had extracted $100 million in profits from their initial $5 million investment.
Other investors and creditors weren’t so lucky:
But a final bankruptcy filing on the firm in last December also shows what happened to Ampad creditors. Out of a debt load of $170 million owed to unsecured creditors, Ampad ended up paying out less than $330,000, the filings show.
That amounts to two-tenths of a cent for every dollar owed in that case.
I wonder where Richard Mourdock was when it came to those creditors.
Buzzfeed’s Andrew Kaczynski, who’s made quite a name for himself digging up candidate videos from the CSPAN archives, flagged this Boston Globe editorial from 2002:
But according to a 2002 interview with former managing director of Bain Capital Marc Wolpow, Romney was directly responsible for Ampad’s layoffs. Wopow and a fellow Bain partner sat on the board of directors of Ampad, and were responsible with carrying out the Bain business plan that caused the layoffs.
“My job was to maximize the profits to Bain Capital’s partners from the Ampad transaction,” Wolpow told the Globe in 2002.
Wolpow said Romney was responsible for the business plan carried out by Bain in Indiana. “Mitt’s employees executed that transaction,” he said. “We carried out the business plan. He was CEO of the firm.”
It remains to be seen how well this will play with Indiana voters, and to what extent the Obama campaign will use this line of attack in Indiana. It would dovetail nicely with any attacks on Richard Mourdock’s record on the Chrysler bankruptcy.
On the other hand, a similar line of attack against Mitch Daniels and his record with IPALCO didn’t help Democrats hold the Governor’s office in 2004.
“Bankruptcy report on Bain-owned Ampad: Creditors repaid $.002 for every dollar owed” — Maggie Haberman, Politico, May 21
“President Obama’s campaign shifts attack on Mitt Romney to story of American Pad & Paper” — Glen Johnson, Boston Globe, May 21
“Ampad: A controversial deal” — Boston Globe infographic (PDF)
“Obama campaign continues attack on Romney economics, hitting Bain’s profit from Ampad bankruptcy” — Jed Lewison, Daily Kos, May 21