MBA: Very Concerned About the Implications of US Debt Default

As the deadline for extending the nations debt limit gets closer to the August 2nd deadline, financial services groups are starting to take action.

On Tuesday, the U.S. Chamber of Commerce and financial industry trade groups such as the Securities Industry and Financial Markets Association and the Financial Services Roundtable pushed Congress to act. Unlike in previous debates about health care and financial reform, most of the financial community has tried to step delicately and avoid picking particular partisan plans.

The Mortgage Bankers Association issued a statement saying it’s very concerned about the implications of a government default.

“The Mortgage Bankers Association is very concerned about the implications to the financial system of the United States if the U.S. defaults on its debt,” said David Stevens, CEO of the Mortgage Bankers Association.  “The likely impact to the financial markets, interest rates, and to every family in America will be costly if the ceiling is not raised. We implore policymakers to act swiftly and find a workable solution, given the short time left, to take this step and not put the credit rating of the United States in jeopardy.”

Banking firms have been hesitant to advocate for any specific solution to the debt ceiling, with many executives saying they don’t care how the debt ceiling is raised, as long as it’s done to avert a default and the risk of a downgrade of the U.S. credit rating.

With the August 2nd deadline quickly approaching, it’s starting to change.

“Right now, at this moment, there’s nothing more important for financial stability than coming to an agreement that will both lift the debt ceiling and put us on a sound fiscal path,” said Rob Nichols, president of the Financial Services Forum, a trade association of the chief executives of Goldman Sachs, JPMorgan Chase and other large financial firms during an interview with the Tribune.

Debt ceiling threat has Wall Street scrambling


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