Playing the bankruptcy card

On May 14 the Obama campaign launched a new ad slamming presumptive Republican presidential nominee Mitt Romney over his tenure as head of Bain Capital, a private equity and investment firm, saying he used it merely for profits. That night President Barack Obama, without noting the irony, attended a fundraiser in the New York home of the president of the world's largest equity firm, Blackstone. Also not noted: that Jonathan Lavine, one of Obama's bundlers, or top donors that recruit other donors, is a managing director at Bain Capital.

But that didn't stop the president's campaign from bashing Bain. In Obama's ad, he enlists GST Steel workers whose plant closed after the company fell into bankruptcy under Bain.

"They were trying to figure out ways to eliminate jobs," one former steelworker says. "They closed it down, filed for bankruptcy without any concern about the families or communities."

"We view Mitt Romney as a job destroyer," says another.

The ad doesn't mention that the company filed for bankruptcy in 2001-two years after Romney left the company. Or that Lavine, who has raised over $100,000 for the president, according to the Los Angeles Times, was a director at the firm when GST filed bankruptcy.

In fact, dozens of U.S. steel companies, including Bethlehem Steel, went bankrupt around the same time under the weight of foreign competition and union-related costs. And while Bain had trouble with GST, the investment firm succeeded with Steel Dynamics, a non-union steel company in Indiana.

If jobs and the economy are the central themes of the 2012 presidential race, Bain Capital will surface often. As one of its founders reaching back to the 1980s, Romney holds his tenure there as part of his economic credentials. The firm invested in a number of businesses that went bankrupt but also made immense wealth off successful investments in companies like Staples and Domino's Pizza.

The Wall Street Journal studied 77 businesses that Bain invested in during Romney's tenure and found that 22 percent filed for bankruptcy or closed after eight years. It said Bain mostly invested in risky businesses that the firm hoped to turn around, so failure was to be expected, but perhaps occurred at a higher rate than other private equity firms. Meanwhile, the firm gained $2.5 billion in those 77 business investments.

Romney's fellow Republicans thought he was vulnerable on this issue back in January, with former contender Newt Gingrich and Rick Perry launching vehement attacks on Romney's conduct regarding Bain. Romney survived the attacks then (one of the last men standing in the GOP field, Rick Santorum, defended Romney against the Bain attacks), and he seems ready for the attacks now.

The Romney campaign on May 14 was ready with an ad of its own, highlighting the growth of Steel Dynamics under Romney's management. "When others shied away, Mitt Romney's private sector leadership team stepped in," the narrator says. And the Romney campaign said it welcomes Obama's "attempt to pivot back to jobs"-countering with the administration's bad investments of taxpayer money in now-bankrupt companies like Solyndra.

Listen to a report on the Obama campaign's attack ads on WORLD's radio news magazine The World and Everything in It.