President talks to finance executives including Goldman boss Lloyd Blankfein as business leaders urge action on shutdown
- theguardian.com, Wednesday 2 October 2013 17.18 EDT
Goldman
Sachs chief executive Lloyd Blankfein, right, with Bank of America CEO
Brian Moynihan. Photograph: Win McNamee/Getty Images
The meeting with finance chiefs came as the shutdown entered its second day and Obama prepared to meet with Republican leaders in the hope of ending the impasse. Business leaders expressed concern about the shutdown, and about a looming battle over the nation's $16.7tn debt ceiling.
Treasury secretary Jack Lew has warned that the US could default on its debts if the limit is not raised soon.
"There's precedent for a government shutdown; there is no precedent for a default," Blankfein told reporters after the meeting. He warned that the economic recovery was already "shallow".
Earlier on Wednesday, the European central bank president Mario Draghi warned that a protracted US shutdown could impede economic recoveries around the world. "If it were to be protected, it is certainly a risk to the US and the world recovery, so we need to have it present in our minds," he said.
Business Roundtable president John Engler said the shutdown and deficit row were already harming the economy. "America's business leaders are extremely disappointed by the failure of the nation's political leaders to reach an agreement on funding the basic operations of the federal government," he said.
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Barack Obama: Wall Street should be 'concerned' over debt ceiling talks
President Barack Obama has warned Wall Street it should be “concerned” as talks to extend America’s borrowing limit threaten to go to the wire.
America is currently due to breach its borrowing limit on October 17 Photo: AP
“This time’s different. I think they should be concerned,” Mr Obama told US television.
“Democracy’s
messy. But when you have a situation in which a faction is willing
potentially to default on US government obligations, then we are in
trouble,” he added.
The US government
has been shut down for two days because of a political stand-off that
economists fear will bleed into parallel talks about whether to extend
America’s $16.7 trillion borrowing limit.
It
is an annual negotiation that has continued right up to the deadline
three times since Mr Obama came to power, and which stands to alter the
course of America’s economic recovery.
Wall
Street and Capitol Hill had been working on the assumption that the
political circus would deliver the same result this year, but they are
feeling less sure now that Congress has allowed the government to shut
down before resolving their stalemate.
The Republicans have
said they will only agree to the stop-gap budget measures needed to get
the government back up and running if the White House agrees to delay
the President’s flagship public healthcare scheme by a year.The government shutdown - the first for 17 years - is expected to cost the US economy around $300m a day, according to analysts at IHS. Economists claim it could shave as much as 0.9pc from US GDP in the third quarter if it continues for three weeks, potentially wiping out America’s economic recovery.
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Blankfein Says Finance CEOs Urge Action on Debt Limit
By Phil Mattingly & Roger Runningen - Oct 2, 2013 4:15 PM CT
Play
Blankfein: Bankers Warned Obama of Default Risks
“There’s a consensus that we shouldn’t do anything that hurts this recovery,” Blankfein said as he left the White House. “They shouldn’t use the threat of causing the U.S. to fail on its obligations to repay its debt as a cudgel.”
The meeting, set up by the Financial Services Forum, a Washington-based trade group representing CEOs of the largest Wall Street banks, was part of an effort by the Obama administration to leverage the business community’s clout in breaking the stalemate.
“Wall Street can have an influence, CEOs around the country can have an influence,” Obama said in an interview today with CNBC. “I think it is important for them to recognize that this is going to have a profound impact on our economy and their bottom lines, their employees, and their shareholders.”
‘Apolitical’ Executives
The group met earlier in the day with Republican lawmakers and staff, including Majority Whip Kevin McCarthy, the third-ranked member of the House.Blankfein said the executives were “apolitical” and not taking sides on the underlying political issues, including Republican demands that the president’s health-care law be stripped of funding or delayed as the price of a deal.
Those arguments, he said, shouldn’t be connected to taking action to make sure the government can pay its bills.
“There’s precedent for a government shutdown; there’s no precedent for default,” he said. “We really haven’t seen this before and I’m not anxious to be part of the process to witness this.”
Moynihan said the goal of the executives was to make sure “people understand the seriousness of the situation.”
Debt Deadline
Even as the government remains shut down, raising the government’s $16.7 trillion debt limit has become the focal point for White House officials and the business community.Treasury Secretary Jacob J. Lew reiterated in a letter to lawmakers yesterday that the U.S. will hit the debt ceiling no later than Oct. 17 and urged them to increase the nation’s borrowing authority “immediately.”
As he arrived at the White House, Dimon said he hoped an agreement will be reached before the debt-ceiling deadline.
“We just want solutions,” Dimon said. “If people do the right things, America can grow aggressively and grow rapidly. That’s what we should be looking for.”
Obama is set to meet with the top Democratic and Republican leaders of the House and Senate later today.
A senior Republican aide with knowledge of today’s meetings said the CEOs asked what they could do to help bridge the gap between the two parties on the issues. The aide asked not to be identified to discuss the private meeting.
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Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein left a White House meeting with President Barack Obama and said lawmakers are risking the economic recovery if they don’t raise the federal debt ceiling.
Lloyd
Blankfein, right, Chairman and CEO of Goldman Sachs, and Brian
Moynihan, CEO of Bank of America, speak to the media after attending a
meeting of the Financial Services Forum with President Barack Obama at
the White House on October 2, 2013, on the second day of the government
shutdown. Photographer: Saul Loeb/AFP via Getty Images
1:18
Oct.
2 (Bloomberg) -- House Speaker John Boehner speaks with reporters about
his meeting with President Barack Obama at the White House and the U.S.
government shutdown. Boehner said Obama refused to negotiate in a
meeting with top congressional leaders about the government shutdown.
(Source: Bloomberg)
5:39
Oct.
2 (Bloomberg) -- Kevin Logan, chief U.S. economist for HSBC Securities
USA Inc. in New York, talks about the government shutdown and its
implications for the nation's economy, markets and Federal Reserve
monetary policy. He speaks in Hong Kong with Susan Li on Bloomberg
Television's "First Up." (Source: Bloomberg)
Lloyd
Blankfein, chief executive officer of Goldman Sachs Group Inc., from
left, Robert Benmosche, chief executive officer of American
International Group Inc., Keith Sherin, vice chairman and chief
financial officer of General Electric Capital Corp., and Douglas Flint,
chairman of HSBC Holdings Plc, arrive to the White House to meet with
U.S. President Barack Obama in Washington, D.C., on Oct. 2, 2013.
Photographer: Andrew Harrer/Bloomberg
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