Obama and Private Equity

This is unacceptable! How can Obama appoint so many private equity guys in his administration. Doesn't he know how ruthless these people are!!!!! He must defeated in 2012. This is not acceptable!

http://www.politico.com/blogs/burns-haberman/2012/01/obamas-private-equity-alums-110747.html

Obama's private equity alums

By ALEXANDER BURNS |
1/13/12 12:14 PM EST

For all the fire directed at the private equity world this week – from Mitt Romney’s opponents in both parties – few major politicians can claim to have their hands clean when it comes to the financial services industry, and President Barack Obama is no exception.

Newt Gingrich and Rick Perry found that out the hard way: Gingrich took criticism for attacking Bain Capital while having one served on the board of Forstmann Little, while Perry came in for a grilling from Laura Ingraham over the thousands of dollars in campaign donations he’s taken from private equity executives.

And Obama may have some private equity questions of his own to answer, having both taken donations from the industry and appointed a number of private equity veterans to his administration.

The most prominent among them is Jack Lew, the new White House chief of staff, who was previously a managing director at Citi Alternative Investments. Nancy-Ann DeParle, a deputy chief of staff who helped lead the president’s health care reform effort, was a managing director at CCMP Capital.

Jeffrey Goldstein, the recently-departed undersecretary of the Treasury for Domestic Finance, was a managing director at Hellman & Friedman before he joined the administration. He’s returning to the private equity firm now that he has resigned. Former auto czar Steve Rattner came out of the world of private equity before briefly working with the administration, and defended Bain Capital from attacks in a POLITICO op-ed this week.

A number of Obama advisory board members and lower-profile appointees have also had private equity on their resumes. Mark Gallogly of Centerbridge Partners, and formerly of the Blackstone Group, was on the President’s Economic Recovery Advisory Board. Richard Parsons, the former Time Warner executive on the President’s Council on Jobs and Competitiveness, is also linked to Providence Equity Partners Inc. Walter Jones, the U.S. executive director of the African Development Bank, was a senior private equity executive with Gravitas Capital Advisors.

There are other private equity connections on the President’s Management Advisory Board, the Board for International Food and Agriculture Development, the National Infrastructure Advisory Council and the Advisory Committee of the Pension Benefit Guaranty Corporation.

In light of that, one private equity insider suggested to me in an email: “If President Obama plans to campaign against Mitt Romney and the alleged evils of private equity, then he will need to start by purging the ranks of his own administration.”

Obama campaign spokesman Ben LaBolt said otherwise, arguing that the president isn’t demonizing private equity or attacking financial services in general, but rather trying to hold Romney to account for misrepresenting his work at Bain Capital.

“The central premise of Mitt Romney’s candidacy is asking Americans to elect him based on his experience in his version of the ‘real economy.’ We agree with his opponents – describing his ‘real economy’ experience isn’t about demonizing free enterprise or someone’s ability to make a profit,” LaBolt said. “It’s about Mitt Romney being truthful about his experience, and what that experience and perspective might mean for someone seeking the Oval Office.”

He continued: “As his business partner said, Romney’s experience wasn’t about job creation. It was about outsourcing jobs, closing plants, laying off workers and making millions by bankrupting companies. That’s the type of economic philosophy that helped create the economic crisis, and voters have a right to know that and judge for themselves whether that’s what they want in a president.”

As the campaign moves forward, it’ll be up to Obama to make the argument himself that there’s a major, meaningful difference between coming directly out of private equity, and being friendly to the industry and bringing private equity executives into government. That may not be hard, given how tightly Romney has bound himself to Bain Capital, but it could force at least a bit more nuance into the Democratic argument. And it could end up isolating Romney and Bain as the targets of general-election attacks, rather than private equity more broadly.

 

I agree with the idea here. I was in agreement with that Rolling Stone piece from a couple years back, too, which harshly criticized Obama for having so many Wall Streeters and such on his economic staff. So, yeah, not a great situation having these PE guys so near the top.

 

Definitely don't want one at the top

 

He's already slamming Romney over his private capital experience. Obama has no plan that is going to work for his re-election. The FED is already thinking about doing more easing because our economy is tetering and europe's economy is burning.

I guess he could always run against Reid and his do nothing Senate!

Just wait until Obama starts asking for another debt limit increase next summer. The shit is going to hit the fan.

 

Not all PE/venture capital firms are necessarily corporate raiders, which is what Bain has been accused of by Romney's political adversaries. So the question should not necessarily be limited to the general business such a company is in, but rather the manner in which it conducts its business. You may have a valid point, but let's take care not to paint with too broad a brush unless you specifically know otherwise.

 

Absolutely. Like painting all One Percenters with the same brush.

 

Yowser! what choices we have, PE guys or Harvard academics.Then ya got your Warren Buffets who want to raise taxes then ya got your Jimmy Buffets (not a back thing, it's 5 o'clock somehwere).

<iframe width="420" height="315" src="http://www.youtube.com/embed/vsU8_DSmlXY" frameborder="0" allowfullscreen></iframe>

 

------------------------------------------------------------------------------------


CNN) -- "In a presidential primary season distinguished so far by the absence of substantive debates, the controversy over whether Mitt Romney and his partners at Bain Capital should be considered job creators or job destroyers raises a profoundly important issue.

Beyond the concerns about the loss of American jobs to off-shoring or automation and the food-fight tactics of Romney's rivals is a legitimate question about what kind of capitalism 21st century Americans should want.

The choice is between "stakeholder capitalism" and "shareholder capitalism." According to the theory of stakeholder capitalism, corporations are and should be quasi-public entities with responsibilities to the nation-state and to the communities in which they are embedded. The corporation should make a profit and provide a fair return to investors. At the same time, workers who contribute their labor to the company have a legitimate interest in it as well as investors who provide capital. Managers serve the company and the country, not merely the investors.


Michael LindIn the theory of "shareholder capitalism," the corporation exists solely for the purpose of the investors, whom the managers serve as agents. In shareholder capitalism, short-term profits are the only goal, and if that means laying off workers instead of retraining them or reassigning them, breaking up the company and selling the assets to enrich private equity partners and shareholders, so be it.

The stakeholder conception of the firm is still the norm in Europe and East Asia, as it was in mid-20th century America. But beginning in the 1970s, the shareholder conception of capitalism prevailed in the United States.

From the perspective of shareholder theory, private equity firms like Romney's are promoting efficiency, even as they make short-term profits by dismantling or destroying companies and laying off their workers.

From the different perspective of stakeholder capitalism, the emphasis on short-term profits for investors at the expense of all other considerations, including the well-being of employees and local communities, has been a tragic mistake.

What are the implications? If America continues to favor shareholder capitalism, there is no guarantee that policies to favor American business will preserve or create jobs or help anyone other than investors. On the other hand, if the United States were to move away from shareholder capitalism toward stakeholder capitalism, the law might limit hostile takeovers of companies or require workers and even local governments to have a say in corporate decisions. In some cases this might preserve jobs and factories at the expense of innovation and efficiency.

As a practitioner of the shareholder capitalism of the last generation, Mitt Romney as president would probably support policies that assume that the short-term interests of investors like Bain are identical to the long-term interests of the economy. By the same token, he would probably resist policies that increased the influence of managers, workers and local communities over companies at the expense of shareholders and financiers.

Nominated as secretary of Defense by President Eisenhower in 1953, former General Motors CEO Charles "Engine Charlie" Wilson, a symbol of old-fashioned stakeholder capitalism, told the Senate that "I thought what was good for the country was good for General Motors and vice versa."

Does Mitt Romney, today's symbol of shareholder capitalism, believe that what is good for Bain is good for America? If he wins his party's nomination and this year's presidential election, Americans will find out."
http://edition.cnn.com/2012/01/13/o...ign=Feed:+rss/cnn_allpolitics+(RSS:+Politics)

 

Thanks for the thought-provoking piece, TL.

 

The proper metric is "jobs saved". If Bain went into a company with 2000 employees and let go 1000 and kept 1000. They should get full credit for saving 1000 jobs.

This is Obama style counting.