Matt Taibbi Reveals How Romney Made His Fortune -- It Ain't Pretty, and He Shouldn't Be Proud of It
US Republican presidential candidate Mitt Romney boards his campaign plane at Tampa International Airport in Tampa, Florida, on August 29 en route to Indianapolis, Indiana.
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Editor's note: The following is a transcript of a Democracy Now! interview with Rolling Stone contributing editor Matt Taibbi, whose recent article in the magazine gets to the bottom of Mitt Romney's enormous wealth.
A new article by reporter Matt Taibbi in Rolling Stonesheds light on the origin of his fortune, revealing how Romney’s former firm, Bain Capital, used private equity to raise money to conduct corporate raids. Matt Taibbi writes, quote, "what most voters don’t know is the way Mitt Romney actually made his fortune: by borrowing vast sums of money that other people were forced to pay back. This is the plain, stark reality that has somehow eluded America’s top political journalists for two consecutive presidential campaigns: Mitt Romney is one of the greatest and most irresponsible debt creators of all time," Taibbi writes. He goes on to say, "In the past few decades, in fact, Romney has piled more debt onto more unsuspecting companies, written more gigantic checks that other people have to cover, than perhaps all but a handful of people on [planet] Earth."
Well, Matt Taibbi joins us now, contributing editor for Rolling Stone magazine. His most recent in-depth piece called "Greed and Debt: The True Story of Mitt Romney and Bain Capital," author of the book also, Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History.
AMY GOODMAN: Lay it out for us. Excellent piece, investigative piece, on Mitt Romney’s wealth. Where did it start?
MATT TAIBBI: Well, you know, for me, it started when I had to cover this campaign earlier this year, and I was listening to Romney’s stump speech about debt. You know, he came up with this whole image of a prairie fire of debt raging across America that was literally going to burn children alive in the future. And I kept thinking to myself, does nobody know what this guy did for a living and how he made his money? You know, Mitt Romney is unabashedly a leverage buyout artist. And a leverage buyout artist is a guy who borrows lots of money that other companies have to pay back. And that’s the simple formula.
He started out—his most famous deals, of course, are essentially venture capital deals like the Staples situation, where he built a company from the ground up. But after Staples, he switched to a different model, that he preferred for the rest of his professional career, in which he took over existing companies by putting down small amounts of his own cash, borrowing the rest from—typically from a giant investment bank, taking over controlling stakes in companies, and then forcing those companies to pay him either through management fees or through dividends. And that’s his business formula.
AMY GOODMAN: Explain what private equity is.
MATT TAIBBI: Well, that is what a private equity fund does. They’re essentially—it’s a synonym for what in the '80s we called the leverage buyout business. It's a small group that raises capital and then goes and leverages takeovers of companies using borrowed money. In the '80s, these—this sort of business was glamorized through a couple of things, in particular, in pop culture. One was the movie Wall Street, where Gordon Gekko, the famous Michael Douglas character from the Oliver Stone movie, was essentially a private equity guy. He was a leverage buyout takeover artist. And the other one was a book called Barbarians at the Gate, which was a true story of the takeover of RJR Nabisco by a company called KKR, which was another Bain Capital-like takeover company. And that's what they are. They’re essentially guys who borrow money to take over companies and extract wealth from those companies to pay off their investors.