Subject: Mitt Romney’s private equity mindset - POLITICO.com Print View
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Mitt Romney’s private equity mindset - POLITICO.com Print View

Barack Obama’s goal between now and Election Day is to paint Mitt Romney as an out of touch guy whom you’d expect to run a private equity firm, the economic version of the super-secret CIA.

Romney’s response: act like a guy who ran a private equity firm.

The decision to close Romney’s Israeli fundraiser to the press — only to reverse it a day later — is the latest move that seems to come straight out of the Bain Capital playbook.

Of course, most private equity firms operate in a black box world where they can take publicly traded companies private so that they won’t have to face public demands of shareholders — or, in this case, the the national press corps.

But while Romney has tried to distance his candidacy and campaign operation from how he ran Bain, his private equity background where voluntary disclosure is the exception, not the rule, has been on display since the beginning of the race.

“The nature of that business is extraordinarily private. That’s why it is called private equity,” said one Washington-based adviser to a private equity firm. “You don’t know who their investors are and they don’t have to share a lot of information. The attitude is — you want to be one of our partners, here’s how it is going to work, and you aren’t going to ask a lot of questions.”

To wit, Romney press aide Rick Gorka’s explanation Saturday for why the fundraiser at the King David Hotel would be closed to reporters was simply to say: “Closed press.” A day later, Romney’s campaign reversed course, allowing a small number of reporters to attend his remarks.

It’s not just Romney’s fundraiser policy — which came on the heels of his brush with the Fleet Street tabloids last week in London — that has private equity folks psychoanalyzing the GOP nominee.

There’s the question of Romney’s tax returns prior to 2010, which he’s declined to disclose. There’s the issue of his post-1999 connections with Bain, and how much he knew about decisions made through 2002. He’s also not releasing the names of the elite donors gathering checks for his campaign, a routine presidential candidate disclosure since 2000.

“He is applying all of [the] experience to the nth degree to this campaign and because his lens was forged in the private sector in a particular specialized, controversial, complicated, gray area of the finance sector he was in, he leaves himself open to all kinds of questions,” said Paul Equale of Equale & Associates, who regularly consults for private equity firms.

Bain Capital did not respond to a request for comment for this article.

Also perhaps unsurprisingly, the political world hasn’t been as understanding — Obama and the Democrats have hammered Romney for his secrecy, and some Republicans have suggested he release his tax returns now and move on.

“I think sometimes to kind of hide the ball raises more questions than answers,” said Sen. Mark Warner (D-Va.), a former tech company CEO.

Romney spokesman Ryan Williams said the Obama campaign’s focus on his private equity background and secrecy is an attempt to “divert attention from our economic challenges with specious shiny objects.

“President Obama is acting like a Washington politician who is desperate to distract from his record of trillion-dollar deficits, abysmal GDP growth and failed economic policies,” Williams said in a statement. “Voters are focused on jobs, and they realize that President Obama is in over his head when it comes to the economy and unworthy of a second term.”

There is little legally required of the private companies like private equity firms to be released and companies like Bain rarely publicly comment. The industry has fought hard in Washington against lawmakers’ attempts to require more transparency by making them register with the Securities and Exchange Commission and release the names of all investors and value of their funds.

“It’s not so much that Romney and his campaign are secretive, it’s that his natural inclination is to approach a challenge — in this case the campaign — by blocking out the noise, staying focused and taking a long-term approach,” a source familiar with the private equity industry said. “That is an excellent quality for being an executive or even being president, but at times it can create challenges on the campaign trail.”

Republican operative Ron Bonjean, who has worked as a consultant for the überprivate Koch brothers, said the tension shows how the Romney campaign’s business and political cultures are colliding.

“It’s a struggle between how much do you disclose in an era where the public demands complete transparency versus what is usually only expected in the business world,” Bonjean said.

Republican strategist Tony Fratto agreed.

“It’s a longtime corporate culture to overcome,” Fratto of Hamilton Place Strategies said of companies’ restrictive policy on making private information public. “The lawyers have a very strong tendency to never release anything that has some kind of remote legal jeopardy in the future.”

But Steve Schmidt, former campaign manager to Sen. John McCain’s (R-Ariz.) unsuccessful 2008 presidential bid, said that releasing the tax returns won’t win Romney any friends.

“Anytime you are in a disclosure fight, if you ultimately yield under pressure, … it’s not as if someone is standing there applauding you that it’s terrific for being so transparent,” Schmidt said. “Each release draws the market for more outrage, more demands for disclosure. It becomes an extremely debilitating issue.