As Paul noted twice today, the Obama campaign has reached a new low by resuscitating its Bain-Capital-related smears of Mitt Romney. Picking up on a recycled story in the Boston Globe, the Obama campaign suggested in a call with reporters that Romney may be a felon; either that, or he is misleading the American people.
The Democrats’ smear is based largely on ignorance of securities law. In her phone call today, Obama staffer Stephanie Cutter cited SEC filings which listed Romney as a “controlling person” after 1999. If Romney was controlling Bain Capital, Cutter argued, then obviously he was responsible for Bain Capital’s investments after 1999 and has been lying about his relationship with the company. But being a “controlling person” doesn’t mean that you are running the company. The term is defined in the SEC’s Rule 405:
The term “control” (including the terms “controlling,” “controlled by,” and “under common control with,” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.
As the owner of Bain Capital from 1999 to 2002, Romney naturally was listed as a controlling person in Bain’s SEC filings. That has nothing to do with whether he played any operational role in the firm’s investments, which, by all accounts, he didn’t. But the Associated Press has gone to bat for the Obama campaign, trying to make something out of a bogus story. Start with the headline, which is false: “Documents conflict on when Romney left Bain.” There are no documents that contradict Romney’s statement, and Bain’s, that he left the firm to go to work for the Olympics in 1999 and never returned. Now on to the story. The first sentence is false, too:
Documents filed by Mitt Romney’s former company conflict with the Republican presidential candidate’s statements about when he gave up control of the private equity firm Bain Capital.
Either intentionally or through ignorance, the AP is repeating the Obama campaign’s misunderstanding of the meaning of “control” in SEC regulations. The AP’s account continues to mislead:
President Barack Obama’s campaign seized on the discrepancies Thursday to charge that Romney was lying about his background.
There are no discrepancies.
The documents, filed with the U.S. Securities and Exchange Commission, place Romney in charge of Bain from 1999 to 2001, a period in which the company outsourced jobs and ran companies that fell into bankruptcy.
This is simply wrong. The SEC filings do not place Romney “in charge of Bain.” The description of Bain’s activities in the 1999-2001 time period is also tendentious.
Romney has tried to distance himself from this period in Bain’s history, saying on financial disclosure forms he had no active role in Bain as of February 1999. Obama has labeled Romney a job killer in hopes of undercutting the Republican’s claim that his private business experience gives him the ability to turn around the struggling economy.
But at least three times since then, Bain listed Romney as the company’s “controlling person,” as well as its “sole shareholder, sole director, chief executive officer and president.”
As noted above, the fact that Romney was a “controlling person” for purposes of securities laws has nothing to do with whether he was running the company; nor is his status as a shareholder or director–Romney owned the company until a buyout was completed in 2002–relevant. And whatever titles may have been recited in the filings shed no light on whether he made the investment decisions that the Obama administration now wants to criticize. Bain’s statement on his role is unequivocal:
Mitt Romney left Bain Capital in February 1999 to run the Olympics and has had absolutely no involvement with the management or investment activities of the firm or with any of its portfolio companies since the day of his departure. Due to the sudden nature of Mr. Romney’s departure, he remained the sole stockholder for a time while formal ownership was being documented and transferred to the group of partners who took over management of the firm in 1999. Accordingly, Mr. Romney was reported in various capacities on SEC filings during this period.
This statement is confirmed by the various offering documents for the Bain funds after 1999, none of which list Romney as one of the professionals involved in fund management. And, of course, not a single person has said that Romney was active in Bain’s management after 1999 or was involved in any of the decisions that the Obama administration criticizes. So the Associated Press is joining with the Obama campaign in peddling an unsupported and discredited smear.
Still, I wish that the Romney campaign would expand its defense of Romney’s Bain connection. It is understandable that the campaign responded to Obama’s false advertising with the simplest, most definitive answer: Romney had nothing to do with the events that were the subject of Obama’s ads. But much more could be said; and, after all, Romney did own Bain for a time after 1999, even if the partnership group was in the process of buying him out. I would like to see the Romney campaign take on more directly Obama’s ridiculous claims about “outsourcing”–which the AP apparently doesn’t understand any better than Barack Obama does–“shipping jobs overseas,” and so on. Maybe the American people are hopelessly ignorant; that is the Obama campaign’s working assumption. But Bain Capital is and always has been a fine firm with which Romney is rightly proud to be associated. In my view, slimy attacks from the likes of Obama shouldn’t deter Romney from talking sense to the American people about the economy.