Mitt Romney: Auto Bailout Beneficiary

Thursday, September 20, 2012

Workers install doors on Chevrolet Malibu and Buick LaCross vehicles April 21, 2010 at the General Motors plant in Fairfax, Kansas. (Steve Fecht/General Motors/Getty)

On the campaign trail, and in his formal acceptance speech for the Democratic presidential nomination, President Barack Obama has promoted what he considers to be a success story: the government’s $80 billion bailout of the American auto industry.

However, the spending of billions of dollars of taxpayer money to bailout the car industry is a divisive issue in the upcoming election.

Obama’s challenger, Republican presidential nominee, Mitt Romney, did not support the bailout of General Motors and Chrysler. Back in 2008, when Obama won the presidency, Romney wrote an op-ed in The New York Times in which he called for a “managed bankruptcy” for the troubled automakers. Today, Romney stands by his “managed bankruptcy” option and says the Detroit automakers would have come out stronger through the process.

But according to Phillip Martin, a senior investigative reporter at WGBH, Romney himself is a beneficiary of this very bailout he opposed.

"When Romney left Bain, he engineered his own golden parachute," says Martin. This "parachute" allowed him to continue to profit from past and future Bain investments.

These future investments included Sensata Techonologies, a company that makes sensors in cars. In 2008, Sensata was heading south. But after the auto bailout, the company started to make money. A lot of money. 

Jeremy Thompson, a senior researcher for Mass Uniting, spoke to Martin about his findings. "One of Mitt Romney's top investments is this thing called Fund 8, which is a Bain Capital investment. Fund 8 is part of Bain's controlling interest in the company called Sensata. Sixty-three percent of their business in 2011 came from the automotive industry."

Exactly how much money Romney made from this is unclear, in part because of his continued refusal to release his complete tax returns. From his 2010 tax return, we know that he made about $22 million that year — a good amount of which was brought in by Fund 8. 

In the wake of Romney's comments about the '47 percent' of Americans who accept government money, this development seems ironic at best, and hypocritical at worst — particularly given his vehement opposition of the bailout. 


Phillip Martin

Produced by:

Maggie Penman and Elizabeth Ross

Comments [6]

Pat from Boston, MA

Taxpayer bail out of GM didn't include closing plants who service GM like Sensata. The unfortunate outcome and Romney's involvement shows that taxpayers can't get a common sense break from government even if taxpayers are the ones responsible for the bills. Congress doesn't work for America any longer; it works for itself, for GM, and for Bain Capital companies like Sensata.

What an insult!

Oct. 19 2012 08:38 PM

A self-correction of my lengthy comment below:

Mitt Romney's early pronouncement in favor of a managed bankruptcy was in November of 2008, not 2009. And the GM bankruptcy, directed by the Obama Administration, was filed in June of 2009, not 2010.

I am sorry for the mistake in the two date-citations.

Here is President Obama, quoted in a USA Today story, speaking about the 2009 GM bankruptcy:

"General Motors' bankruptcy is part of a 'viable, achievable plan that will give this iconic company a chance to rise again,' President Obama said after GM (GM) filed for bankruptcy early Monday, launching a complicated, $59 billion effort to save it from collapse."

Compare with a quote from the Mitt Romney NYT Op-Ed (fairer than anything Phillip Martin supplied), about eight months earlier:

"The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs.

The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk. In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check."

Sep. 20 2012 11:22 AM
Angel from Miami, FL

A government of the people that cannot protect the people it represents is probably not a government worthy of the people that forms it.

Only a multinational corporate mindset would be against a bailout. This kind of thinking isn't based on a desire to help a particular homeland. It belongs to fiscal nomads who would rather pick up stakes for greener places than to restore the lands they just drained.

Sep. 20 2012 11:02 AM

I wanted to throw my radio against the wall listening to this. But I took a deep breath, and I'll say this as calmly as I can.

The GM that is "alive" today (while "Osama bin Laden is dead," Joe Biden reminds us) is a New GM that is the product of a managed bankruptcy. Six months into his term as President, Obama and his car czar came to the inescapable conclusion that the only way to preserve a functioning semblance of General Motors was via a managed bankruptcy.

A managed bankruptcy is what Mitt Romney had suggested, in November of 2009.

And at the time of Romney's suggestion (mind you, Romney NEVER wanted anything like a liquidation of GM) very few others in politics or business had the courage to say the same thing. Mitt Romney wanted to save GM, and he felt that the way to do it was to use the legal, financial and business tools of bankruptcy. Romney proposed funding a bankruptcy thorugh federal loan guarantees, so keen was he on making it workable.

Eventually, in choosing the managed bankruptcy option, the Obama Administration chose to use already-authorized TARP funding, instead of any private or other funding sources. By doing so, the Obama Administration reserved some special privileges to carve out some rather unique preferences in the bankruptcy for UAW stakeholders, etc. The pure financial stakeholders in GM -- the Wall Street bondholders -- took a very severe beating in that process. And others not so connected to the Obama Administration, like non-union retirees at Delphi, saw their pensions slashed.

Listening to Phillip Martin's bewilderingly misleading story, a listener might presume that Obama "bailed out the auto industry" and that Mitt Romney would have let the auto industry fail or liquidate.

I fail to understand even the premise of linking Mitt Romney's tiny and minor interest in Sensata to GM and Chrysler. (Ford Motor Company was never restuctured.) If indeed the argument is (and it is assuredly a false one, even on the basis of Romney's own writings, which Phillip Martin scarcely reported, and certainly not fairly) that Mitt Romney was happy to let GM die, it would have (we are led to understand) killed the Senasta business. If Romney was selfishly interested in Senasta, then he logically would have wanted GM to succeed in some form. Is that, uh, a problem? Wanting GM to succeed as a going concern?

I have heard a lot of very bad reporting on public radio, on the subject of the GM bankruptcy. This was probably the single worst, most manipulative, most intentionally misleading story I have yet heard.

Sep. 20 2012 10:27 AM
Larry Fisher from Brooklyn, N.Y.

I'm hoping that Romney will make a ton more money from losing the election than he would from winning it. I'm banking on it

Sep. 20 2012 10:22 AM
Ed from Larchmont

You talk a lot about Governor Romney and not very much about President Obama at all.

Sep. 20 2012 09:18 AM

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