Bloomberg on Romney’s bust-out operation

Anthony Gardner, himself a private-equity operator, has crunched some numbers:

10 of roughly 67 major deals by Bain Capital during Romney’s watch produced about 70 percent of the firm’s profits. Four of those 10 deals, as well as others, later wound up in bankruptcy.

Gardner then explains, using some of those big deals (including Ampad and GS Steel) as examples, how the asset-stripping operation worked: Bain would buy control of a company using a little money and a lot of debt, load up the target with still more debt, pay out big chunks of the loan proceeds to itself as fees and share buy-backs, and then let the now-worthless company die, sticking creditors, workers, and sometimes the government with the tab.

I’m sure there’s a legal difference between this sort of operation and the classical “bust-out scam” (aka “long firm fraud”) for which small-time grifters go to prison. (Bust-out scammers buy a retailer of, for example, cameras. They then place big orders with a bunch of suppliers, getting routine 30-day trade credit, sell the stuff quickly for whatever it will fetch, move the proceeds to other bank accounts, and go out of business, leaving the suppliers stuck.) But I’m damned if I can see any moral difference.

And the notion that Romney is somehow not responsible because the actual bankruptcies only took place after he stopped active management of Bain whenever that turns out to be) is just absurd. What ought to count is when the fatal blow was struck, not when the medical examiner signed the death certificate.

Update  John Cole beat me to the “bust-out” comment; he has video.