Much has been said in the media about the "evils" of private equity, implying that investor return is paramount and the fate of the worker secondary. In an earlier post I opined on the track record of Bain Capital, detailing how many companies were acquired and the over-all results. The conclusion was that private equity companies work within our capitalist system. As a result, there are some "winners" and some "losers" but over-all there were more on the upside than the downside. I pointed out that capitalism does not guarantee that everyone will be a winner.
Since the president is now in full re-election mode, he has been very critical of Governor Romney's tenure at Bain Capital depicting Romney as a dollar hungry capitalist only interested in profits and returns to investors. He went on to say that that may make you successful in private equity but is no qualification for the presidency. And this coming from a community organizer, non-tenured law professor and junior senator who had not completed one term when he ascended to the presidency! On closer examination, we can see that Governor Romney is far more qualified to be president than Obama was when he was elected.
If Obama is going to double down on his attacks on Romney and say that Romney's record in private equity is fair game, then Obama's record in public equity is also fair game. And that record is not very good.
There is an excellent opinion by Marc Thiessen published in the Washington Post on May 24 titled:
"Forget Bain - Obama's public equity record is the real scandal"
Following is a summary of that opinion piece.
Obama has invested billions of taxpayer dollars in private businesses. Most of those investments have turned out to be complete disasters - leaving in their wake bankruptcies, layoffs, criminal investigations and taxpayers on the hook for billions.
Here are just a few examples of Obama's public equity failures:
Raser Technologies: In 2010 Obama gave them a $33 million taxpayer-funded grant to build a power plant in Utah. According to the Wall Street Journal, the company has filed for bankruptcy protection. The company has fewer than 10 employees and owes $1.5 million in back taxes.
ECOtality: Obama gave this company over $126 million in 2009 for the installation of 14,000 electric car chargers in five states. At the State of The Union address in 2010, Obama highlighted them as an example of a stimulus success story. According to the company's SEC filings, ECOtality has incurred more than $45 million in losses and has declared they may not be able to sustain profitability.
Additionally, ECOtality is under investigation for insider trading according to CBS News.
Nevada Geothermal Power: The Obama administration gave this company a $98.5 million taxpayer loan guarantee in 2010. It has been reported the company is in financial turmoil, their cash reserves have been drained and their auditor concluded there is significant doubt about the company's ability to continue as a going concern.
First Solar: The Obama Administration gave this company more than $3 billion in loan guarantees for power plants in Arizona and California. According to Bloomberg Business Week, the company fell to a record low in Nasdaq trading May 4 after reporting $401 million in restructuring costs tied to firing 30% of its workforce.
Abound Solar: The Obama administration gave this company a $400 million loan guarantee to build photovoltaic panel factories. According to Forbes the company halted production and laid off 180 employees in February.
Beacon Power: This green energy storage company received a $43 million loan guarantee from the Obama administration. Last fall this company was delisted by Nasdaq and has filed for bankruptcy.
This is just a sample of Obama's dismal track record in dispensing taxpayer money:
A company called SunPower received a $1.2 billion loan guarantee. As of January they owed more than they were worth
Brightsource got a $1.6 billion loan guarantee and has posted net losses of $177 million.
And of course, there is Solyndra, the solar panel manufacturer that received half a billion in our money in loan guarantees and went bankrupt, leaving taxpayers on the hook.
Obama says all projects received funding "based solely on their merits." If so, then I wonder why it is that fully 71%, as quoted in Peter Schweizer's book "Throw Them All Out", of the Energy Department's grants and loans went to "individuals who were bundlers, members of Obama's National Finance Committee or large donors. These cronies raised over $457,000 for Obama and were rewarded with grants or loans in excess of $11 billion!!!
Now that is quite a return on investment! I guess that is why the Energy Department Inspector General has launched more than 100 criminal investigations.
To conclude, Mr. Thiessen said:
"Now the man who made Solyndra a household name says Mitt Romney's record at Bain Capital 'is what this campaign is going to be about.' Good luck with that , Mr. President. If Obama wants to attack Romney's alleged private equity failures as chief executive of Bain, he'd better be ready to defend his own massive public equity failures as chief executive of the United States."
