Former Massachusetts Governor Mitt Romney said during CNBC’s Republican presidential debate that he would not bail out Italy’s struggling economy even if that nation’s debt problems threatened to sink the entire European financial system.
“Europe is able to take care of their own problems,” he said Wednesday night when asked if the U.S. had a stake in the eurozone’s continuing economic struggles. “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,” Romney continued. “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 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 Dow Jones industrial average fell nearly 400 points on Wednesday due to worries that Italy’s economy — the seventh largest in the world — might need a massive Greek-style bailout to stay afloat. In a worst-case scenario, Italy might be forced to abandon the Euro in a move that could jeopardize the future of the continent’s fragile political union.
While Romney was adament that the U.S. should not move to bail out Italy, or banks holding Italian debt, he stopped short of calling for an exit from the International Monetary Fund.
“I’m happy to continue to participate in world efforts like the World Bank and the IMF,” he said, “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.”
The former governor then pivoted to address the domestic economic situation, and said the U.S. should view Italy as a cautionary tale.
“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 budget, you’re going to find America in the same position Italy is in four or five years from now, and that is unacceptable,” he said. “We’ve got to fix our deficit here.”