DES MOINES, Iowa -- Republican presidential candidate Mitt Romney said in an interview Thursday that none of the money that flowed into Bain Capital during his time at its helm in the 1980s and 90s came from Wall Street investors, though he said he doubted that records of such matters will be made public.
"I don't believe any of the funding came from Wall Street, meaning from investment banks or the like," Romney told The Huffington Post on board his campaign bus as he barnstormed this state ahead of next Tuesday's caucuses, which kick off the Republican primary process.
"Our funding came from individuals, and then ultimately we got funding from a church pension fund, endowments -– I think our largest single investor group were endowments, colleges," Romney said. "And then we used those funds to either start businesses, venture capital, or to try and buy businesses in trouble and make them stronger. That's not technically Wall Street, that's not an investment banking function, but it is financial services."
Romney's statement was a rebuttal to Texas Gov. Rick Perry, who has said that Romney is "part of Wall Street." Perry has not said publicly that Bain Capital's investors were Wall Street firms, but that was a clear implication of his charge. Perry told The Huffington Post in mid-December that "Bain Capital is part of that whole Wall Street structure."
Romney cofounded Bain Capital in 1984 and worked for the private equity firm for most of the next 15 years, before leaving to oversee the 2002 Winter Olympics in Salt Lake City. He went on to become governor of Massachusetts from 2003 to 2007. Bain's headquarters were in Boston, but Perry argued that because private equity firms often raise money from Wall Street institutions and banks, it was tied into the overall system.
"I don't think you have to actually have an address on Wall Street to be a part of Wall Street," said Perry. His larger point was that Romney's relational ties to the world of high finance would make him prone to bailing out large firms or banks in trouble if he were to become president.
Though Romney supported the 2008 bank bailout, he disavowed the idea that some institutions are "too big to fail." "I don't believe in the concept of too big to fail," he said. "I believe that institutions have the capacity to go through bankruptcy if necessary, to reorganize their obligations."
Romney, asked about Perry's comment, distanced himself from Wall Street but didn’t run away from it.
"I am not going to be the technical divider of what's Wall Street or not. Wall Street is typically thought of as investment banking and banking and we were not an investment bank or a bank. But we were in the financial services sector generally," Romney said. "I am not a Wall Street guy, classically defined, but I am not going to quibble over definitions."
"I can tell you that I have run four different enterprises in my life. One was a consulting firm, one was a private equity and venture capital firm, one was an Olympics, and the other was a state. And my track record in those places speaks for itself," he said.
Romney's lack of concern over being associated with Wall Street is consistent with the general stance of his candidacy. He has spoken here in Iowa repeatedly of an "opportunity society" that encourages achievement and profit-making, and he has cast President Barack Obama as a big-government liberal who demonizes the wealthy and seeks to redistribute their wealth to create an "entitlement society."
As for Romney's claim that none of the money coming to Bain during his time there came directly from Wall Street, a former Bain principal who wished not to be identified said that may not have been the case. He told HuffPost that Chase Bank, Banker's Trust and Bank of Boston all may have been investors in Bain during Romney's time there. But he added that he could not say this with certainty.
Romney indicated he did not think records of Bain's investors would be made public. "I don't know that the Bain people would disclose their investors," he said in the interview.
Bain Capital itself has not yet responded to a request for comment on its policy regarding disclosure of past investors.
Perry is not the only Republican to knock Romney for his career in private equity. Former House Speaker Newt Gingrich (R-Ga.) and former Utah Gov. Jon Huntsman have done so as well. Gingrich said Romney should give money back from deals he made that cost people jobs, but then apologized for the remark. The Huntsman campaign hosted a conference call with local government officials in New Hampshire to talk about job losses inflicted by Bain during their takeover of a company in the state.
Obama and the Democrats, for their part, are highlighting the fact that Bain's practice of leveraged buyouts, which involved raising capital to purchase companies and then restructure them in pursuit of better returns, sometimes led to layoffs at those companies.
Romney has also come under fire of late for saying he does not intend to make his personal tax returns public, as every Republican presidential nominee in recent history has done. He has left himself some wiggle room, saying his plans "may change in the future" if he wins the nomination.
One theory about why he may not want to disclose his returns is that much of his income over the past decade has come from a retirement package with Bain that pays him millions of dollars each year. It is suspected that that income was taxed at the capital gains rate of 15 percent, rather than at the 35 percent top marginal tax rate for conventional income.
Democrats are already attacking Romney for presumably enjoying a lower tax rate, portraying it as an example of an unfair advantage over far less wealthy Americans.
"Mitt Romney -- a millionaire 200 times over -– pays a lower tax rate than many teachers, firefighters, police officers and other hardworking folks in Iowa and across the country," the Democratic National Committee said this week in a memo. "Is this Mitt Romney's idea of helping the middle class?"
Romney himself, in an interview earlier this month with Charlie Rose, said, "I'm not suggesting we have the very wealthy get special breaks and get a better deal than anybody else."
HuffPost asked Romney, who is estimated to be worth between $190 and $250 million, if he thought he was getting a "special break" by receiving income taxed at 15 percent, compared to many middle class Americans who pay 25 percent on their income.
"You take advantage of the opportunity to be an American and build a bright future and you pay your taxes as required by law," Romney said. "And if something is a capital gain, you treat it as a capital gain. If something is ordinary income it should be treated as ordinary income. And the determination of those things has been made by Congress and by the courts and by the Internal Revenue Service. I've always followed the law as to the taxes that we've paid, my wife and I have paid."
"And we can talk about how to make the tax code better going forward," he said.
Romney then mentioned his own proposal to eliminate taxes on capital gains, interest and dividends for Americans making $200,000 or less a year.
"My own view is that the people who are well-off are doing quite well and don't need help, in terms of tax help, tax relief help," he said. "The people who are poor have a safety net that helps care for them and needs to be mended from time to time. But it's the people who are in the middle class who are in trouble, and that's why my proposal on taxation is to eliminate the tax on capital gains, interest and dividends, for middle-income Americans, not for high-income Americans."
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