Bank CEOs Urge Obama To Avoid U.S. Default

Bank CEOs Urge Obama To Avoid U.S. Default

Major U.S. bank CEOs met with President Barack Obama today, asking him to find a way to end the current political standoff before the nation’s debt ceiling is reached later this month, reports Jared Favole of The Wall Street Journal.

Bank CEOs Urge Obama To Avoid U.S. Default

Bank CEOs meeting with Obama

“There’s precedent for a government shutdown. There’s no precedent for default,” said Goldman Sachs Group Inc (NYSE:GS) CEO Lloyd Blankfein, after emerging from a meeting with President Obama. Blankfein was joined by Bank of America Corp (NYSE:BAC) CEO Brian Moynihan and other banking execs in the meeting, and they all wanted to make sure that President Obama understands the seriousness of a default.

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This sentiment is in line with most of Wall Street, which doesn’t appear overly concerned about the government shutdown. It’s not that there won’t be any economic harm, but most don’t expect it to do more than shave a few basis points off growth, and that’s if the shutdown lasts for a few weeks. But a government default is another matter.

“There’s a consensus that we shouldn’t do anything that hurts this recovery that is a little bit shallow, not very well established and is quite vulnerable. And the shutdown of the government but, particularly, a failure to raise the debt ceiling would accomplish that,” said Blankfein. “We’re here as representatives of the financial system, and so we are in a position to really know early what the consequences are.”

Government shutdown

The government shutdown began on October 1 when the House of Representatives followed through on their threat to condition the budget on defunding ObamaCare, which the President has said is a non-starter. Many people predicted that the shutdown would take place, but no one knows how long it will last.

Negotiations came to a halt after the shutdown, but Senate Majority Leader Harry Reid (D., Nev.) said today that the the Senate would pass a resolution that got the government running again temporarily so that both sides would have more time to negotiate spending for 2014. This is essentially what Reid had been asking for before the shutdown, but with a shorter time span, so it’s not clear if it is enough to get House Republicans on board.

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Michael has a Bachelor's Degree in mathematics and physics from Boston University and Master's Degree in physics from University of California, San Diego. He has worked as an editor and writer for several magazines. Prior to his career in journalism, Michael Worked in the Peace Corps teaching math and science in South Africa.
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