Bankers including Goldman Sachs Group Inc. Chairman and Chief Executive Officer Lloyd Blankfein and JPMorgan Chase & Co. chief Jamie Dimon called on President Barack Obama and Congress to raise the federal debt limit to steer the U.S. government away from the threat of default.
“The consequences of inaction -- for our economy, the already struggling job market, the financial circumstances of American businesses and families, and for America’s global economic leadership -- would be very grave,” the executives wrote in the letter sent today by the Financial Services Forum, a Washington-based trade group representing the largest banks.
The House of Representatives is scheduled to vote today on a debt-limit proposal that would face opposition from the Senate’s Democratic majority, setting up a congressional showdown ahead of the Aug. 2 deadline for raising the $14.3 trillion ceiling. Senate Majority Leader Harry Reid, a Nevada Democrat, has pledged to kill House Speaker John Boehner’s measure if the Ohio Republican’s plan is sent to the Senate.
As congressional leaders continued to wrangle over debt-limit proposals, the Standard & Poor’s 500 Index fell 2 percent yesterday, the biggest drop in almost two months. The cost of insuring against a U.S. default climbed to the highest level since February 2010.
“A default on our Nation’s obligations, or a downgrade of America’s credit rating, would be a tremendous blow to business and investor confidence -- raising interest rates for everyone who borrows, undermining the value of the Dollar, and roiling stock and bond markets -- and, therefore, dramatically worsening our Nation’s already difficult economic circumstances,” the group of financial-industry executives wrote in the letter to the U.S. Congress and the White House.
In addition to Blankfein and Dimon, the letter was signed by Bank of America Corp. CEO Brian Moynihan, Vikram Pandit, CEO of Citigroup Inc., Morgan Stanley President and CEO James Gorman, Richard K. Davis, chairman and CEO of U.S. Bancorp, Robert Kelly, chairman and CEO of Bank of New York Mellon Corp. and John Stumpf, chairman and CEO of Wells Fargo & Co.
Thomas J. Wilson, chairman and CEO of Allstate Corp., Jim Weddle, managing partner of Edward Jones, Steven A. Kandarian, president and CEO of MetLife Inc., John R. Strangfeld, chairman and CEO of Prudential Financial Inc., Joseph L. Hooley, chairman and CEO of State Street Corp. and Rob Nichols, the president and CEO of the Financial Services Forum, also signed.
The executives’ letter came on the same day the U.S. Chamber of Commerce, Financial Services Roundtable, National Association of Manufacturers and National Retail Federation joined with 111 other business associations to urge House members to vote for Boehner’s proposal.
“While no legislation is perfect, the current proposal cuts spending immediately by more than the extension of the debt ceiling, provides an enforceable mechanism to produce additional spending reductions with extensions of the debt limit predicated on these cuts, and allows for a vote on significant procedural change to our budgeting process,” the associations wrote in the letter sent to House members today.