Fact Check: Ad Goes After Romney's Tenure at Bain Capital

By Steve Kanigher

Published 10/11 2012 08:00PM

Updated 10/12 2012 12:32PM

Claim: A new advertisement airing on KLAS-TV Channel 8 from Priorities USA Action, a super political action committee that supports President Barack Obama, features a man who says, "With Romney and Bain Capital, the objective was to make money. Whether the companies they came in and worked with made money or not was irrelevant. Bain Capital always made money. If we lost, they made money. If we survived, they made money. It's as simple as that. He promised us the same things he's promising the United States. He'll give you the same thing he gave us. Nothing. He'll take it all."

Verdict: Partly true and partly misleading. The ad sources a Reuters story published in January on Bain Capital, the private equity company co-founded by Republican presidential nominee Mitt Romney. Reuters reported that Bain made at least $8.5 million in profit on a steel mill in Kansas City, Mo., even though the facility eventually closed and cost 750 people their jobs. In addition, a federal insurance agency had to issue a $44 million bailout to pay for the mill's underfunded pension plan, Reuters reported. The man featured in the ad, Pat Wells, was one of the steelworkers who lost his job. Wells made sense when he said that Bain Capital's objective was to make money.

But the ad lost steam when he claimed that Bain always made money. The Wall Street Journal, which also reported in January on Bain's track record, examined 77 businesses that the company invested in during Romney's tenure from 1984 through 1999. The newspaper found that 22 percent either filed for bankruptcy reorganization or closed within eight years after Bain first invested, and an additional 8 percent "ran into so much trouble that all of the money Bain invested was lost." Some 70 percent of the returns Bain investors made came from only 10 deals and four of those companies also declared bankruptcy.

Reuters likewise reported: "Romney's career at Bain included both successes and failures. That is not unusual in the private equity business, where investors buy troubled companies and try to turn them around, often through aggressive use of debt."

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