Industry Outlines Market Risk of Debt Default
The Senate Banking Committee held a hearing today to discuss the impact a default could have on U.S. financial stability and economic growth. The hearing coincided with testimony from Treasury Secretary Lew before the Senate Finance Committee, where he warned of potentially catastrophic repercussions of default, including credit market disruptions, a significant loss in the value of the dollar, higher interest rates, and risk of another financial crisis. Banking Committee witnesses were all industry representatives, who unanimously agreed that a voluntary default should be avoided at all costs. As anticipated, the discussion was extremely partisan, with Democrats criticizing GOP ‘political tactics and asking for insight on the short- and long-term affects a default would have on various sectors of the economy. Ranking Member Crapo (R-ID) and his Republican colleagues largely emphasized the growing national deficit, arguing that using the debt ceiling might be the only way to achieve spending reforms. This report analyzes the session, which occurred as the Administration and House GOP sought some way out of the debt-ceiling dilemma.
The full report is available to retainer clients. To find out how you can sign up for the service, click here