“Let me quote from a recent article. Quote, Romney was willing to go to extremes to secure federal bailout, end of quote, when Bain Consulting was on the verge of collapse. The way Bain Consulting reorganized cost the government and American taxpayers $10 million. Now, imagine that. It was one thing when a million middle-class jobs were on the line. It was another thing when his own financial interests and those of his partners are on the line.”
--Vice President Biden, Lordstown, Ohio, Aug. 31, 2012
Back in July, when we first looked at this issue, we noted that the Obama campaign had very carefully and cleverly avoided saying directly that Mitt Romney obtained a taxpayer-funded bailout when he led a rescue of his old consulting firm, Bain & Co.
But now Vice President Biden, seizing on a new report in Rolling Stone magazine, has dropped all pretense and declared that the deal “cost the government and American taxpayers $10 million.”
Is this any truer than it was back in July?
The Rolling Stone article, headlined “The Federal Bailout That Saved Mitt Romney,” has one new element — documents from the Federal Deposit Insurance Corp. that were obtained under the Freedom of Information Act. The documents are certainly interesting, demonstrating some of the Romney’s hardball tactics to obtain a favorable outcome, including threatening to drain the company’s cash position by paying out bonuses if a deal was not reached.
But though Rolling Stone repeatedly uses the phrase “bailout,” as we explained before this did not involve taxpayer funds or government funds.
At issue was a $38 million loan made to Bain by a failed bank, the Bank of New England, and the FDIC’s efforts to collect on the loan. Ultimately, the loan was reduced by $10 million but the money was made up through assessments on FDIC-member banks.
As we noted: “That’s right — no taxpayer money is involved. The FDIC prides itself on not taking taxpayer funds.”
The Rolling Stone article concedes this point: “While taxpayers did not finance the bailout, the debt forgiven by the government was booked as a loss to the FDIC – and then recouped through higher insurance premiums from banks.”
The article argues that because such fees typically are passed on by banks to consumers, then the American people “ultimately” paid for the loan reduction. That is certainly an interesting argument, but it’s not the same thing as “the government and American taxpayers.”
The Pinocchio Test
Biden should have read the Rolling Stone article more carefully before citing it in a campaign speech. We had previously said the use of the term “bailout” was a stretch, worthy of a Pinocchio, but the vice president takes it to a new level by claiming Romney “cost the government and American taxpayers $10 million.” No matter how you parse it, that’s simply not correct.
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