May 28, 2012
by Todd Shepherd
Former Denver Mayor and Obama National Campaign Co-chair Federico Peña has a résumé surprisingly similar to Mitt Romney's.
President Obama continues to hammer presumptive Republican nominee Mitt Romney on his record with Bain Capital. In a fundraiser on Wednesday in Denver, the President continued to push the "Venture Capital Vampire" theme saying, "What Gov. Romney doesn't seem to get is that a healthy economy doesn't just mean a few folks maximizing their profits through massive layoffs or busting unions."
We wonder if former Denver Mayor and Clinton Transportation and Energy Secretary Federico Peña happened to be in the audience, and if he agreed.
Peña has been a partner at private equity firm Vestar Capital since 2000. And while President Obama has been giving private equity a bad name, both Peña and Vestar managing director James Kelley have made recent contributions to Obama's re-election efforts.
Furthermore, Peña's record as a venture capital investor dates even back to his 2008 days, when he also served as an Obama National Campaign Co-Chair.
Democrats insist, however, that Bain was a different kind of private equity firm ... one that cannibalizes companies, doesn't believe in people, and leaves a hollow shell where there once were company picnics and Christmas parties.
So let's examine the recent "humanitarian" record of Vestar Capital.
In March of 2011, Vestar acquired 100% of Del Monte Foods through a leveraged buyout.
Just two weeks ago, Del Monte announced the closure of a plant in Kingsburg, Califoria, effectively slashing 1,000 jobs. "I am extraordinarily disappointed by Del Monte to make this decision," Kingsburg Mayor Bruce Blayney told the Kingsburg Recorder. "This is a major blow to the local economy."
Roughly eight years ago, Vestar purchased the Solo Cup Company.
According to this report, in 2007 the Solo Cup Co. (with Vestar as a parent firm) shuttered three U.S. factories. As early as 2010, with Vestar still as the parent company, Solo Cup announced plans to shut an eighty year old factory, ending more than 540 jobs.
In 2002, Vestar acquired frozen food giant BirdsEye Foods.
Roughly four years later, Vestar laid off approximately 500 workers at BirdsEye. "Some of them were employed at Birdseye for 15 to 30 years," according to KGO Ch. 7 in San Fransico.
None of this makes Federico Peña a bad person, or Vestar Capital a company of evil corporate raiders. Just as real estate "flippers" are an important mechanism in that market, venture capital firms are an important part of the business market. Yes, when a private equity firm buys a company, layoffs sometimes occur. But it beats the whole company going down the drain and taking everyone with it.
As columnist David Brooks recently penned, "...the larger argument is about private equity itself, and about the changes private equity firms and other financiers have instigated across society. Over the past several decades these firms have scoured America looking for underperforming companies. Then they acquire them and try to force them to get better."
For more pot-meets-kettle fun, Colorado Congressmen Jared Polis and Ed Perlmutter are joining with the President in slamming Bain, despite the fact they have taken contributions from foreclosure specialists and venture firms alike, as pointed out by Colorado Peak Politics. How do Polis and Perlmutter both own the special minds and hearts needed to discern which are the good venture capital firms, and which are the bad ones?
If the President intends to make this election about Romney's record at Bain, then Mr. Peña and James Kelley must come clean about layoffs at Del Monte, Solo Cup Company, and Birdseye foods. If not, Mr. Peña might not be available to stand on the campaign stage with the President at his next Colorado rally.
***UPDATE I*** As of publication, no one at Vestar Capital has yet been reached for comment.
***UPDATE II:*** CEO OF PEÑA'S FIRM RECENTLY BRAGGED OF 50-100% PROFITS...?!?
***UPDATE III*** PEÑA'S FIRM WORKED WITH LIBERAL-HATED "BARBARIANS AT THE GATE" FIRM
***UPDATES*** IV & V:
CO CONGRESSMEN POLIS AND PERLMUTTER: LET THE CAMPAIGN WITHOUT "VULTURES" CAST THE FIRST STONE
Peña follow up: Thanks Colorado Peak Politics!