The head of Wall Street’s main regulator says a US default could cause deep and lasting damage to markets.
(Bloomberg) — The head of Wall Street’s main regulator says a US default could cause deep and lasting damage to markets.
Securities and Exchange Commission Chair Gary Gensler on Wednesday warned that a failure by Democrats and Republicans in Washington to reach a deal on raising the US debt ceiling would impact trading, the ability of businesses to raise money, and investors.
Gensler, a Democrat who was appointed by President Joe Biden, said the standoff has already affected short-dated US Treasury bills.
“If the U.S. Treasury as an issuer were actually to default, it would have very significant, hard to predict, and likely lasting effects on investors, issuers, and markets alike,” Gensler said in prepared remarks for a conference hosted by the International Swaps and Derivatives Association in Chicago.
“It would make the Cyclone Roller Coaster at the 1933 Chicago World’s Fair look like a kiddie ride.”
Republican congressional leaders and the White House remain in protracted negotiations over possible budget cuts as part of a deal to raise the debt ceiling before June 1.
That’s the date Treasury Secretary Janet Yellen has warned the US risks breaching its ability to pay its outstanding obligations. Officials are expected to meet again on Friday to try to come to a solution.
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