15 Bankers just paid a visit to the White House, listened to President Obama, and explained what a total disaster it would be if the US debt-ceiling is breached and Treasuries technically default. While the politicians exclaimed how bad a government shutdown would be, the banks have turned the panic dial to 11 as Goldman's Lloyd Blankfein noted, bankers are “in a position to really know early what the consequences are,” and it would be catastrophic. The irony that the firm which the government is trying to fine $20 billion for selling fraudulent debt and giving bad advice is now providing the same government with advice on its own bad debt, is not lost on us as Dimon was among the visitors but it is Blankfein's warning, echoing Obama, that will get the headlines, "they shouldn't use the threat of causing the U.S. to fail on its obligation to repay debt as a cudgel."
Blankfein - "You can litigate these policy issues, you can relitigate these policy issues in a public forum, but they shouldn't use the threat of causing the U.S. to fail on its obligation to repay debt as a cudgel."
*BLANKFEIN: BANK CEOS EXPLAINED IN MTG HOW BAD DEFAULT WOULD BE
*BLANKFEIN SAYS HE'S `NOT ANXIOUS' TO BE WITNESS TO DEFAULT
*BLANKFEIN SAYS ECONOMIC DAMAGE OF DEFAULT WOULD BE `SEVERE'
“There’s no debate on the seriousness of the U.S. not paying its debt,” Bank of America CEO Brian Moynihan tells reporters after he, other executives met with President Obama.
Default might affect small businesses, Treasuries
Debt ceiling fight in Aug. 2011 led “to a slowdown in the economy, and we’re facing that again”
Bankers are “in a position to really know early what the consequences are,” Goldman’s Lloyd Blankfein tells reporters
Says bankers “listened” in conversation with Obama, then told him “exactly how bad it would be”
Blankfein: “There’s precedent for a government shutdown; there’s no precedent for default”
“We’re the most important economy in the world, we’re the reserve currency in the world, payments have to go out to people”
“If money doesn’t flow in, then money doesn’t flow out, so we really haven’t seen this before and I’m not anxious to be part of the process to witness this”