Wall Street lobbies over US debt crisis

 

New York

Senior executives, lobbyists and rank-and-file employees from across Wall Street have swung into action to try to persuade US politicians to pull back from the brink and permit the country to borrow the funds it requires to pay its bills.

The stand-off over raising the debt ceiling – which, if not resolved by tomorrow night, means the federal government will have to stop some payments and may default on its debt – has so alarmed the finance industry that one firm has ordered its staff to contact their Congressional representatives to demand compromise.

Allstate, an insurance firm, sent an email to its 45,000 staff at the end of last week, when markets began to lose confidence that a deal would be reached by the deadline.

The potential consequences of a default are difficult to predict, but could include major disruption in the payments system and the short-term credit markets and a sharp rise in interest rates which would harm the US economy. It would also trigger the loss of the country's triple-A credit rating, with unpredictable consequences for a financial system that uses US Treasuries as collateral in trillions of dollars of transactions and as the basis for pricing many other debt instruments.

Jamie Dimon, chief executive of JPMorgan Chase, held a telephone call with the Treasury Secretary, Tim Geithner, on Friday, in which they discussed contingency plans for keeping the payments system functioning correctly from Wednesday. Mr Dimon reiterated his insistence that a deal must be done. Banks' lobbyists, fearing that politicians have not fully grasped the consequences of a default or downgrade of US Treasuries, have been widely distributing research notes on the crisis to Congressional offices.

Wall Street had been wary of publicly arguing in favour of a debt ceiling increase, fearing that critics will characterise their warnings of a financial crisis as a cynical argument to get another "bailout" from the taxpayer.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border