President Obama is expected to sit down Wednesday with members of the Financial Services Forum. The group represents some of the world’s biggest banks and insurance companies — among them Bank of America, Goldman Sachs and JPMorgan Chase.
One inevitable topic of conversation: the looming deadline to raise the $16.7 trillion federal debt ceiling. That’s the amount of money the U.S. Treasury can legally borrow to pay its bills. Congress has until October 17 to increase it or risk a potential economic disaster.
Wall Street doesn’t just want Congress to raise the debt ceiling, says Chris Krueger, Washington analyst for Guggenheim Securities.
“Ideally they would like to see Congress eliminate the debt ceiling, so we don’t continually have these situations where Congress threatens these showdowns,” Krueger says.
Whether bankers can do much about it is another question, he says. The shadow of the financial crisis still hangs over Washington, and Wall Street isn’t exactly popular with either party.
It won’t be lobbying that gets a divided Congress to work together, says Karen Petrou with Federal Financial Analytics.
“I think it’s ultimately going to be the markets that I hope don’t have to teach them a lesson, because it could be a very costly one to all the rest of us,” Petrou says.
If the U.S. government can’t pay all of its bills, Petrou predicts stock prices will drop sharply, interest rates will spike and that could slow down economic growth.