WASHINGTON — As some of his Republican opponents are fond of saying, Mitt Romney has been running for president for five years now.
Throughout that time, national politics have been dominated by a string of related economic and financial woes.
Romney has been a key figure in this saga, perhaps more important than any other Republican politician. But much of what he did and said in the early stages of the crisis has been largely forgotten.
A review of Romney's public statements throughout the crisis shows that his first reaction is usually a free-market approach, but in times of economic stress those impulses have sometimes given way to greater pragmatism.
Most notably, in September 2008 — at a time when Romney could have stayed on the sidelines — he spoke out forcefully in favor of the $700 billion bailout. This decision helped solidify his status in 2012 as the favorite candidate of Wall Street and also as an object of mistrust among the Tea Party movement.
"I think the whole idea of bailouts is offensive to most Tea Party people," said Sal Russo, co-founder of Tea Party Express, though he added that he does not think the issue will be a deal-breaker in the GOP campaign.
With Romney emerging as the odds-on Republican front-runner in 2012, here is a look at his role in the early stages of the financial crisis, and how his record from the last campaign relates to his candidacy this year.
U.S. Households Become Overleveraged
In early 2007, when Romney began his first presidential campaign, the American public did not look at Wall Street with the same jaundiced eye that it does today.
Romney's experience in the financial sector was seen solely as an asset in Republican politics. In a March 2007 speech, the former Massachusetts governor lavished praise on Goldman Sachs chief Lloyd Blankfein.
"I was with the CEO of Goldman Sachs, we had a great lunch this week, or breakfast this week," Romney told the conservative Club for Growth. "A company at the very top of its game, making more money than ever. He came in and what did he do? He changed everything. And it's even more profitable."
When Romney entered the presidential campaign, the U.S. personal savings rate was at historically low levels, while household debt was peaking.
In retrospect, these were signals that consumers were heavily leveraged, often because they were borrowing against the value of their homes. But during the 2008 campaign, the increasingly risky behavior of U.S. consumers was not a major issue.
Romney argued, though, that the lack of personal savings was a problem. He said the government should encourage families to save more by allowing them to pay no taxes on capital gains, interest and dividends, up to a certain level. "This would help the middle class to be able to invest and save," he said in a speech on Feb. 7, 2007.
During the 2012 race, Romney has revived the idea of eliminating taxes on capital gains, interest and dividends, though now he is targeting the proposal at families that earn $200,000 or less.
He has also adjusted his sales pitch for this tax cut, given that job creation has emerged as the number-one issue of the 2012 presidential race.
Romney's economic plan argues that allowing middle-class families to pay 0% taxes on capital gains, interest and dividends would "free up capital for investment flowing back into the economy and helping to facilitate economic growth."
The Mortgage Crisis Begins
The subprime mortgage crisis ignited in the summer of 2007, when two Bear Stearns hedge funds went belly-up, and scores of subprime securities were downgraded.
But for months, the growing fears on Wall Street barely caused a blip in Republican presidential race. In a rare intrusion into the campaign, Romney was asked at an Oct. 9 debate in Michigan whether it was the job of the government or the private sector to try to stem the state's rising tide of foreclosures.
"It's everybody's job," Romney responded.
But the rest of his comments were about the Michigan economy generally. He offered nothing more specific about housing.
By mid-December 2007, as the votes in Iowa and New Hampshire were approaching, the Republican presidential candidates began to weigh in more forcefully on the growing crisis.
Romney was unsurprisingly far more hostile to government intervention than the Democratic candidates, and he was also more free-market-oriented than fellow GOP contender John McCain. "I'm not in favor of a widespread government bailout," Romney told reporters on Dec. 18.
Five days later, a Romney economic advisor, Gregory Mankiw, wrote in The New York Times: "The question on the minds of many in Congress and in the White House is this: What they should be doing now to keep the economy on track? The right answer: absolutely nothing."
Mankiw argued that the technocrats at the Federal Reserve were in the best position to address the weakening economy.
"This advice isn't easy for politicians to follow," Mankiw wrote. "Because economic downturns mean fewer jobs and falling incomes, they are painful for many families. Voters can confuse inaction with nonchalance and send incumbents packing. But just as patients should avoid doctors who recommend radical surgery for every ailment, voters should be wary of politicians eager to treat every economic ill."
But Romney soon signaled that if circumstances worsened, he might not be so ideologically rigid, telling CNBC on Dec. 26 that he would not close the door on the possibility of cash assistance to homeowners facing foreclosure. "That's not the option I think is essential at this point," he said, "but I don't think you rule out various options that might be available."
In January 2008, Romney was second in Iowa to Mike Huckabee, second in New Hampshire to John McCain and first in Michigan.
On Jan. 19, Romney released an economic stimulus plan, which included housing provisions that in retrospect look relatively modest. It called for the Federal Housing Administration's loan limits to be raised, and for its down-payment requirement to be lowered. Those ideas were later enacted but did little to contain the crisis.
On Feb. 7, after McCain dominated the states that voted on Super Tuesday, Romney dropped out of the presidential race — about five weeks before the government bailout of Bear Stearns.
Romney's hands-off, market-oriented approach to the early stages of the housing crisis has an echo in some of his more recent comments about the foreclosure crisis.
"As to what to do for the housing industry specifically, and are there things that you can do to encourage housing, one is don't try to stop the foreclosure process," Romney told the editorial board of the Las Vegas Review-Journal in October 2011.
"Let it run its course and hit the bottom. Allow investors to buy homes, put renters in them, fix the homes up, and let it turn around and come back up. The Obama administration has slow-walked the foreclosure processes that have long existed, and as a result we still have a foreclosure overhang."
Calls for a Bailout
As the crisis spun out of control in September 2008, and the Bush administration suddenly called on Congress to take decisive action, President Obama and John McCain faced tremendous pressure to sign on to the bailout proposal.
Because Romney had no real responsibility — he was a private citizen, not a candidate — he was in a far different position than Obama and McCain. It would have much easier for him to oppose what became known as Tarp, as many conservatives in Congress did.
Nonetheless, Romney came out strongly in favor of the Bush administration's $700 billion proposal, which passed Congress after failing once in the House.
"I don't like the government getting involved, to be honest," Romney said on CNBC on Sept. 22, 2008. "But at this stage I don't know how you're going to find an institution that's willing to buy troubled loans on such an emergency basis, on a timely basis.
"And if you don't have that occurring, you're going to have banks and institutions start going under, and then you're going to find credit being even more constrained. And what is right now a problem on Wall Street is going to be a problem on Main Street."
In the 2012 campaign, Romney has not spoken as forcefully against bailouts as some of his GOP rivals. During an October 2011 debate, Romney said he didn't like the idea of another Wall Street bailout, but he did leave the door open to that possibility.
"There's no question … that the action that President Bush and that Secretary Paulson took was designed to keep not just a collapse of individual banking institutions, but to keep the entire currency of the country worth something and to keep all the banks from closing and to make sure we didn't all lose our jobs," Romney said.
"Was it perfect? No. Was it well implemented? No, not particularly. Were there some institutions that should not have been bailed out? Absolutely," he said. "But … this approach of saying, 'Look, we're going to have to preserve our currency and maintain America and our financial system' … is essential."