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1/18/12

CNBC's Bain Connection To Auto-Bailout Was Former Guest On CNBC

The Bain Capital partner who allegedly consulted TARP on the auto-bailout appeared on CNBC to discuss how company mergers can be profitable during hard times. In 2009, Ted Rouse told CNBC that strong companies could do well by acquiring small companies in tough economic times. In 2008, Ted Rouse told CNBC that acquisitions reap the most rewards in tough economic times (video here).

Doesn't it seem kinda hypocritical for CNBC to now pin blame on him for giving this same advise to TARP?

CNBC retracted a report that Bain Capital under Mitt Romney advised Obama on his auto-bailout. Desperate to blame anyone but Obama for his historic government debt, CNBC rashly published the report before they received all the facts. CNBC had no names of who did the consulting or what they said. They had contacted Bain for comment at 6pm and after hearing no reply went ahead and published the story at 9pm.

Bain later denied any involvement and CNBC pulled the story.

Today CNBC un-pulled their allegations after learning that Bain Capital was indeed involved, a partner of theirs was anyway. From what it sounds like, TARP called him unexpectedly on the phone and he gave a terse sentence of advise. So a partner of a company Romney led said something to someone at TARP about their auto-bailout, which Obama touted as a success. Boy what a story!

Ted Rouse provided that "unsolicited" advise, Ted Rouse whom CNBC themselves used as an expert on acquiring companies. Ted Rouse specializes in merger integration, which means he cuts the fat off companies that get bought from other companies. His professional profile makes it clear:

Scale deals, designed to achieve cost savings, usually require a comprehensive integration, whereas in deals that expand the scope of the business a selective integration is typically more appropriate.

He cowrote an op-ed explaining how to effectively outsource overseas, using CNBC's owner GE as an example:

"In studying the offshoring practices of major industrial companies, we've found that Continental's highly modular approach is shared by other supply-chain leaders like General Electric...

They realize that just by shifting certain carefully selected processes or activities, they can often approximate the savings of moving facilities without having to bear the shut-down and start-up costs. In particular, they focus on moving the most labor-intensive functions-whether simple assembly or complex engineering-while keeping highly automated functions within their traditional locations.

By placing the right functions in the right places, manufacturers can not only cut their supply-chain costs, but also strengthen their capabilities and extend their reach into attractive new markets." (www.industryweek.com)


So what did this Bain partner tell someone at TARP? According to Eamon Javers at CNBC he said they need to move automobiles around so that dealerships don't have an overstock of cars that people in those particular areas don't want to buy :

"An expert from Bain Consulting also stated many dealerships have too much inventory relative to their market area, particularly in smaller markets or markets where there are more dealers than necessary, because they have to have sufficient diversity in their inventory to cover the manufacturer’s entire portfolio and to meet varied customer needs."

Oh the humanity!

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