The Real Romney (49 page)

140 “What you really cannot do”: Interview with Howard Anderson, 2011.

140 “Why not give him credit”: Interview with Thomas Stemberg.

141 “the success of the enterprise”: Interview with Mitt Romney.

142 Bain told management and unions: Frederick F. Reichheld and Thomas Teal,
The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value
(Boston: Harvard Business School Press, 1996), 172–173.

142 “loyalty effect”: Ibid., 174.

142 $121 million: Ibid.

143 “I throw mine”: Interview with Geoffrey Rehnert.

143 “led me to become”: Romney announcement speech in Stratham, N.H., June 2, 2011.

143 “I never actually ran”: Mitt Romney,
Turnaround: Crisis, Leadership, and the Olympic Games
(Washington, D.C.: Regnery Publishing, 2007), 16.

144 “Ivan the Terrible”: “Investor ‘Ivan the Terrible’ Boesky,”
Time
, December 1, 1986. Boesky struck a plea-bargain deal and was banned from securities trading for life.

144 “I am not a destroyer”: Oliver Stone, director,
Wall Street
, 1987.

144–145 “incessantly destroying”: Joseph Schumpeter,
Capitalism, Socialism and Democracy
, e-book, Taylor and Francis, 2003, 83.

145 “the problem with creative destruction”: Alan Greenspan, testimony before Senate Committee on Banking, Housing and Urban Affairs, July 21, 2005.

145 “for governments to stand aside”: Mitt Romney,
No Apology: Believe in America
(New York: St. Martin’s Press, 2010), 110.

145 Indeed, he wrote: Mitt Romney, “Let Detroit Go Bankrupt,”
The New York Times
, November 18, 2008.

146 “We were pretty happy”: Interview with Josh Bekenstein, 2011.

146 $105 million: Interviews with Bain Capital partners, 2011.

147 “to Mitt’s credit”: Interview with Marc Wolpow, 2011.

147 Prosecutors who worked: Interviews with prosecutors of the Drexel case.

147 “We did not say”: Zuckoff and Bradlee, “Romney’s Business Record Gives Larger Picture.”

148 Palais Royal: “Bain Acquires Apparel Chains,”
The New York Times
, December 30, 1988.

148 “to make sure”: Connie Bruck,
The Predators’ Ball: The Inside Story of Drexel Burnham and the Rise of the Junk Bond Raiders
(New York: Penguin Books, 1989), 366–369. Bruck cited an affidavit by Joseph that mentioned Romney’s phone call.

148 “By doing the deal”: Interview with James T. Coffman, 2011.

148 Drexel pleaded guilty: “The Collapse of Drexel Burnham Lambert; Key Events for Drexel Burnham Lambert,”
The New York Times
, February 14, 1990.

148 Milken eventually pleaded guilty: Stuart Pfeifer and Tom Petruno, “Michael Milken Is Still Seeking Redemption,”
Los Angeles Times
, February 3, 2009.

148 By the following year: Monica Perin, “Clothing Retailer Slapped with Shareholder Suit,”
Houston Business Journal
, April 11, 1999.

149 The department store company filed: Bain Capital partners said they weren’t responsible for financial problems later encountered by the company. After reemerging from bankruptcy, the company said it had become profitable. Greg Hassell, “Bankruptcy Leaves Stage Feeling Fine; Retailer Has Strong Sales After Its Reorganization,”
Houston Chronicle
, August 25, 2001.

149 “It was a terrible situation”: Charles Stein, “ ‘Their Mission Is to Make Money’; but in Doing So, Romney Did More Building Than Slashing,”
The Boston Globe
, October 9, 1994.

149 GST Steel: Robert Gavin, “As Bain Slashed Jobs, Romney Stayed to Side,”
The Boston Globe
, January 27, 2008.

150 accumulating $1.6 billion in debt: Daniel G. Jacobs, “Coming off Life Support,”
Smart Business
, May 2005.

150 When it merged with Behring Diagnostics: Gavin, “As Bain Slashed Jobs, Romney Stayed to Side.”

150 At the same time: Josh Kosman,
The Buyout of America
(New York: Penguin, 2010), 107.

150 “It is one thing”: David D. Kirkpatrick, “Romney’s Fortunes Tied to Business Riches,”
The New York Times
, June 4, 2007. Bain Capital partners said later that the Dade bankruptcy had occurred because the dollar had fallen against the euro and pushed the company’s debt over a certain limit that the banks did not allow. They argue that it was debt investors who had pressured the company and that Bain had helped the company get back onto its feet.

150 In that time of immense success: Mitchell Zuckoff, “Romney Rescue of Bain & Co. a Study in Profit and Loss,”
The Boston Globe
, October 25, 1994.

151 “going over a cliff”: Hugh Hewitt,
A Mormon in the White House? 10 Things Every American Should Know About Mitt Romney
(Washington, D.C.: Regnery Publishing, 2007), 53.

151 “We have bad news”: Ibid., 54–55.

151 The Massachusetts legal code: Massachusetts law has a maximum one-year punishment for the first violation of its wage law, which requires payment within a week of the end of a pay period; see www.malegislature.gov/Laws/GeneralLaws/PartI/TitleXXI/Chapter149/Section27C.

151 “It’s a crime”: Hewitt,
A Mormon in the White House?
55–56.

152 At one point: Stephanie Strom, “A Fund for Distressed Companies Goes Awry,”
The New York Times
, September 25, 1996.

152 The discussion grew increasingly heated: Interview with Bain Capital partners, 2011. The blowup with a Goldman banker appears to have first been reported in: David Snow, “The House That Mitt Built,”
Private Equity International
, September 2007.

152 He convinced: Zuckoff, “Romney Rescue of Bain & Co. a Study in Profit and Loss.”

153 “He was willing”: Interview with Harry Strachan, 2011.

153 Only one person left: Interview with Bain partners, 2011.

153 “If Bain & Co. went bankrupt”: Interview with Geoffrey Rehnert, 2011.

154 the company had paid down: “Damon Corp., 5th Annual Globe 100/The Best of Massachusetts Businesses-Profitability,”
The Boston Globe
, June 8, 1993.

154 Romney personally reaped $473,000: Frank Phillips, “Romney Profited on Firm Later Tied to Fraud,”
The Boston Globe
, October 10, 2002. Romney said his earnings included $103,000 he had made on the deal as well as a 5 percent share of Bain’s profit, or $370,000, totaling $473,000.

154 The day after the merger: Meg Vaillancourt, “Romney-Aided Deal Closed Damon Plant,”
The Boston Globe
, October 9, 1994.

154 “corrective action”: Phillips, “Romney Profited on Firm Later Tied to Fraud.”

154 paid $119 million in fines: Kimberly Blanton, “Needham Lab Fined $119M for Fraud,”
The Boston Globe
, October 10, 1996.

154 “There is a mess”: Yvonne Abraham, “Candidates Spar over TV Ads,”
The Boston Globe
, October 22, 2002.

155 Lifelike: 2001 financial disclosure report, Mitt Romney, Massachusetts State Ethics Commission.

156 Bain lost its money: Interview with Michael Goss, 2007.

156 Auto Palace/ADAP: Brown, “Special Opportunities Fund: Investing in Funds Managed by Bain Capital.”

156 Gartner would go on: Interview with Stephen Pagliuca, 2011.

156 “I don’t think”: Interview with Thomas Stemberg.

157 About forty-five minutes into: Interview with Mark Nunnelly, 2011.

157 In the fall of 1998: Chana R. Schoenberger, “Pie in the Sky; Is Domino’s Pizza Worth All the Trouble to Bain Capital?”
Forbes
, September 17, 2001.

157 “We’re the biggest schmoes”: Mitt Romney, appearance at National Review Institute conference.

157 Bain reaped more than $100 million: Domino’s IPO filing, 2004.

157 earning a 500 percent return: “Domino Effect,”
The Detroit News
, December 9, 2006.

158 “the Tin Man”: Interviews with Bain partner, 2011.

158 “I don’t care”: Mitt Romney, “Searched,” presidential campaign ad, December 17, 2007, http://abcnews.go.com/video/video?id=4026797&tab=9482931§ion=2808950&page=1.

158 “Investment Firm Shuts”: Shirley Leung, “Investment Firm Shuts to Help Find Girl,”
The Boston Globe
, July 12, 1996.

158 “Shortly thereafter”: Robert C. Gay, “Finding the Needle in a Haystack: Thoughts on Being Morally Courageous in Business,” speech at Brigham Young University, 2003.

158–159 “It was a shocker”: Peter Canellos, “Bain Capital Recalls NY Search,”
The Boston Globe
, December 8, 1996.

159 “Mitt’s done a lot of things”: Romney, “Searched.”

159 “more valuable than some”: Canellos, “Bain Capital Recalls NY Search.”

159 During Romney’s fifteen years there: Brown, “Special Opportunities Fund: Investing in Funds Managed by Bain Capital”; interviews with Bain partner, 2011.

159 “the standard investment banker approach”: Romney,
Turnaround
, 16.

159 The first deal: Interview with Scott Sperling, 2011.

160 Experian: Interviews with Bain Capital and Thomas H. Lee partners, 2011.

160 A mere seven weeks: James S. Hirsch and Matthew Rose, “Buyout Group Hits $500 Million Jackpot—Great Universal’s Accord to Buy Experian Brings Fast Investor Bonanza,”
The Wall Street Journal
, November 15, 1996.

160 “go down as one”: Ibid. Partners involved in the deal said the seven-week turnaround time understated the time frame, explaining that Bain and Lee had had nearly six months of conditional ownership while the computer system was being tested.

160 “hit with the lucky stick”: Interviews with Bain Capital partners, 2011.

160 “Gee, Mark, are you sure?”: Interview with Mark Nunnelly.

161 “We stumbled on”: Interview with Phil Cuneo, 2011.

161 “an Internet star”: Ibid.

161 In just under three years: Stan Pace, “Rip the Band-Aid Off Quickly: Why ‘Fast, Focused, and Simultaneous’ Works Best in Corporate Transformations,”
Strategy & Leadership
30, no. 1 (2002): 4–9.

161 “wasn’t like being”: Interview with Bain Capital partner, 2011.

162 “The returns were just eye-popping”: Interview with Geoffrey Rehnert.

162 “passbook” savings accounts: Mitt Romney, appearance at National Review Institute conference.

162 Romney’s own wealth had increased exponentially: Zuckoff and Bradlee, “Romney’s Business Record Gives Larger Picture.”

162 “I’m not going to”: Interview with Mitt Romney.

162 Under federal tax law: www.econlib.org/library/Enc/CapitalGainsTaxes.html. In 2011, the billionaire Warren Buffett drew the attention of President Obama when he said that the tax rate differential contributed to the deficit and said it was unfair that he paid a lower tax rate than his secretary did.