Steve Rattner spent three decades on Wall Street and co-founded the Quadrangle Group, a well-known private equity firm, so it’s not surprising that he might want to defend the honor of the industry that made him rich — especially now that it’s under attack from both the left and right. What’s curious is that Rattner, a former Obama official and longtime Democrat, appears willing to publicly undercut the primary line of attack his party will use on Romney in the general election.
Writing in Politico Thursday, Rattner says that while there is plenty to criticize about Romney — including a “dazzling shortage of principles by incessantly flip-flopping on issues” — the recent attacks on his Bain record “go too far.” Rattner’s defense comes as the private equity industry is preparing a public relations campaign designed to burnish its image.
Newt Gingrich and Rick Perry, both trailing Romney in the polls and increasingly desperate to wound him, have harshly attacked the front-runner over Bain this week. They’ve portrayed him as a ruthless, Gordon Gekko-style corporate raider who strips ailing companies of their value, leaving a trail of lost jobs and busted companies in his wake. Romney made hundreds of millions of dollars for himself and his partners by investing in struggling companies and streamlining their operations. Often, that involved replacing management or laying off workers. Not all of these investments were successful, and in some cases the target companies went bankrupt. In at least a few instances, the companies failed, but Bain made a tidy profit nonetheless.
Needless to say, it’s been somewhat unusual to see Romney targeted by fellow Republicans over his business record, and not just because the attacks violate Ronald Reagan‘s 11th Commandment,”Though shalt not speak ill of another Republican.” Free enterprise has historically been a bedrock GOP principle, and private equity is one of the purest forms of capitalism, in which the dictates of the market — and the often painful consequences of “creative destruction” — are on full display. And yet to listen to the rhetoric of Gingrich and Perry, who have accused Romney of “vulture capitalism,” one might think the pair just returned from an Occupy Wall Street rally.
So now it is left to former Obama official and longtime Democrat Rattner to defend Romney’s private equity past. “Bain Capital is not now, nor has it ever been, some kind of Gordon Gekko-like, fire-breathing corporate raider that slashed and burned companies, immolating jobs wherever they appear in its path,” Rattner writes.
He offers a few caveats. On several occasions, “when the portfolio companies initially showed signs of promise, Bain took advantage of their progress to borrow more money, which it took out as a dividend. Later, the fortunes of each company turned down, ultimately into insolvency.” It is these isolated cases, Rattner argues, along with Bain’s occasionally excessive use of debt, that deserve scrutiny.
Rattner’s piece caps an odd week of revealing role-reversals. It started with Republicans attacking one of their own over his business record. It finishes with a Democrat rising to his defense. In both cases, it seems that personal considerations — for Gingrich and Perry, political ambition and resentment toward Romney; for Rattner, a need to defend a fellow financier, and their shared industry — trumped traditional partisan roles.