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One of Mitt Romney’s most challenging tasks as the Republican nominee for president is to explain his business career, which has been the subject of attacks since last winter’s primaries. The genesis of his extraordinary wealth is something that he’s rarely spoken about on the campaign trail in detail. And when he finally did try to address the issue at the Republican National Convention, he never actually mentioned the name of the private equity firm he ran for decades – Bain Capital.

A new report by Politicker’s Hunter Walker helps explain why Romney shies from defending his  firm’s practices. In addition to buying companies – often strong companies that could be loaded with debt, Bain also invested in firms that could wring profit from crisis. Consider Equity Specialty Holdings, a reinsurance startup specifically created to purchase debt from insurance companies badly hit by the 9/11 attacks.

Walker reports that “Mr. Romney was invested in Endurance Specialty Holdings both through Golden Gate Capital, a private equity firm founded by a former Bain Capital executive in 2000 and through his direct interest in another investment firm, CCG Investment Fund, LP.”

The opportunity for Equity Specialty Holdings was simple. Its management could invest in insurers that badly needed to cover losses due to 9/11, and reap enormous benefit from the increased fees that the surviving insurance companies could then charge. The results were astounding: “Over the next nine months, the company generated a net income of $63.5 million. By the end of 2003, the company was reporting net income of $263.4 million.”

The Romney family disavows any knowledge or responsibility for this investment, saying that their money is in a blind trust. Famously, Romney dismissed Ted Kennedy’s identical response in 1994, ridiculing blind trusts as an “age-old ruse.”

Bain’s reinsurance investment occurred in that murky period when Romney had left Bain in order to work on the 2002 Winter Olympics, yet remained the CEO of the firm. During that period, Bain made many of its most controversial layoffs and investments – including investing in Stericycle, a company that went on to dispose of aborted fetuses. A Bain executive has said Romney retained his position in Bain as leverage while he negotiated his retirement package. The implication is that he retained the power to affect the company’s business.

The world of private equity baffles most Americans with its tangled web of ownership and the ability to profit off bankruptcies. But it’s understandable that Romney would seek to distance himself from controversial investments. Profiting from 9/11 doesn’t fit well with his campaign slogan, “Believe in America.”  Photo credit: AP Photo/Nati Harnik

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