The point of the article is the hypocrisy of running a campaign on the evils of reckless debt creation while making a fortune off of fomenting reckless debt creation for profit NOT who pays for the reckless debt creation. Kind of like a strategic defaulter x 1000.[/quote]
Personally, I wouldn’t have lent a single dollar to any one of Bain’s LBO companies – it’s too risky for me. But… whether or not all of Bain’s debt (both for Bain itself and its portfolio companies) was “reckless” in totality – with 20/20 hindsight, of course – depends on how much was repaid (plus interest) versus how much resulted in losses to the lenders. I don’t know the answer to that but I suspect that if a bank did nothing but lend money to Bain in proportional amounts it probably did o.k. (Recall that even in a BK, debt holders – particularly senior debt holders like banks – generally end up getting a recovery while common shareholders get wiped out.)
I agree we’ve got too much debt, generally (as a society), and that these LBO shops (and the banks that enable them) are not helping things… but “reckless” should be judged in totality rather than one single, or even just a few, transactions.
