Romney appears to shift position on how to respond to eurozone crisis

Zachary Roth
Senior National Affairs Reporter
The Lookout

Mitt Romney presented himself at Wednesday night's debate as "a man of steadiness and constancy."

But one response the former Massachusetts governor gave, on a crucial issue of economic policy, might not help bolster that image.

Asked at the outset of the debate whether he would allow Italy to fail (meaning he would allow its government to default on its debt) and whether the United States has a stake in the ongoing eurozone crisis, Romney said he would take a hands-off approach. "Europe is able to take care of their own problems," he said.

Romney added that he opposed bailing out banks on either side of the Atlantic. "There will be some who say here that banks in the U.S. that have Italian debt, that we ought to help those, as well," he said. "My view is no, no, no. We do not need to step in to bail out banks either in Europe or banks here in the U.S. that may have Italian debt."

Sounds clear enough. But asked a related, though different, question at a debate last month -- what he'd do if a Eurozone crisis put the global financial system on the brink of collapse -- Romney, in contrast with his rivals, sounded much more open to getting involved.

"Clearly, if you think the entire financial system is going to collapse, you take action to keep that from happening," he said. "In the case of Europe right now, they are looking at what's happening with Greece. Are they going to default on their debt, are they not? That's a decision which I would like to have input on if I were president of the United States and try and prevent the kind of contagion that would affect the U.S. banking system and put us at risk."

He added: "I'm not interested in bailing out individual institutions that have wealthy people that want to make sure that their shares are worth something. I am interested in making sure that we preserve our financial system, our currency, the banks across the entire country." How it would be possible to preserve "banks across the entire country" without aiding individual banks was left unsaid.

Given public opposition to bailouts, it's perhaps not surprising that Romney might want to move away from his apparent earlier openness to taking action. But his campaign denied to Yahoo News that Romney had changed his position.

"As Gov. Romney said in both debates, he does not support a European bailout," Andrea Saul, a spokeswoman for Romney, said. "Asking to have input is not a bailout."

But taking action to avert a financial collapse--something Romney said in October he would do--almost certainly would involve a bailout of some kind.

There would be calls for bailing out American banks with exposure to Italian debt only if the entire financial system were on the brink of collapse. No one advocates bailing out banks for their own sake.

So Romney's opposition to a bailout last night sits uneasily with his stated willingness in a previous debate to take action, if necessary, to prop up the financial system.

Here are the full exchanges from both debates, so you can see their context:

Bloomberg/Washington Post debate, October 11, Hanover, New Hampshire:

JULIANNA GOLDMAN, BLOOMBERG NEWS: Governor Romney, it's 2013, and the European debt crisis has worsened. Countries are defaulting. Europe's largest banks are on the verge of bankruptcy. Contagion has spread to the U.S. And the global financial system is on the brink.

What would you do differently than what President Bush, Henry Paulson, and Ben Bernanke did in 2008?

ROMNEY: Well, you're talking about a scenario that's obviously very difficult to imagine. And —

GOLDMAN: But it's not a hypothetical, because more than half —

ROMNEY: It is. I'm afraid it is a hypothetical.

GOLDMAN: Governor, it's not —

ROMNEY: Do you want to explain why it's not a hypothetical?

GOLDMAN: Yes.

ROMNEY: OK.

GOLDMAN: Because more than half the country believes that a financial meltdown is likely in the next several years, and the U.S. banks have at least $700 billion in exposure to Europe. So it's a very real threat, and voters want to know what you would do differently.

ROMNEY: It's still a hypothetical as to what's going to precisely happen in the future. I'm not very good at being omniscient, but I can tell you this, that I am not going to have to call up Timothy Geithner and say, how does the economy work? Because I spent my life in the economy.

I spent my entire career working in the private sector, starting businesses, helping turn around businesses, sometimes successfully and sometimes not. And I know how to make tough decisions and to gather the input from around the country to help make the important decisions that have to be made.

Clearly, if you think the entire financial system is going to collapse, you take action to keep that from happening. In the case of Europe right now, they are looking at what's happening with Greece. Are they going to default on their debt, are they not? That's a decision which I would I would like to have input on if I were president of the United States and try and prevent the kind of contagion that would affect the U.S. banking system and put as at risk.

But I can tell you this — I'm not interested in bailing out individual institutions that have wealthy people that want to make sure that their shares are worth something. I am interested in making sure that we preserve our financial system, our currency, the banks across the entire country. And I will always put the interest of the American people ahead of the interest of any institution.

CNBC debate, November 9, Rochester, Mich.:

MARIA BARTIROMO, CNBC: Governor Romney, should we allow Italy to fail? Should we have a stake in what's going on in the eurozone right now?

ROMNEY: Well, Europe is able to take care of their own problems. We don't want to step in and try and bail out their banks and bail out their governments. They have the capacity to deal with that themselves. They're a very large economy.

And there will be, I'm sure, cries if Italy does default, if Italy does get in trouble. And we don't know that'll happen, but if they get to a point where they're in crisis and banks throughout Europe that hold a lot of Italy debt will -- will then face crisis and there will have to be some kind of effort to try and uphold their financial system.

There will be some who say here that banks in the U.S. that have Italian debt, that we ought to help those, as well. My view is no, no, no. We do not need to step in to bail out banks either in Europe or banks here in the U.S. that may have Italian debt. The right answer is for us...

(APPLAUSE)

BARTIROMO: But -- but the U.S. does contribute to the International Monetary Fund, and the IMF has given $150 billion to the eurozone. Are you saying the U.S. should stop contributing to the IMF?

ROMNEY: I'm happy to continue to participate in world efforts like the World Bank and the IMF, but I'm not happy to have the United States government put in place a TARP-like program to try and save U.S. banks that have Italian debt, foreign banks doing business in the U.S. that have Italian debt, or European debt. We're just -- banks there.

There's going to be an effort to try and draw us in and talk about how we need to help -- help Italy and help Europe. Europe is able to help Europe. We have to focus on getting our own economy in order and making sure we never reach the kind of problem Italy is having.

If we stay on the course we're on, with the level of borrowing this administration is carrying out, if we don't get serious about cutting and capping our spending and balancing our -- our budget, you're going to find America in the same position Italy is in four or five years from now, and that is unacceptable. We've got to fix our -- our deficit here.

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