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Monday, September 16, 2013

ABA’s Chessen Meets With Treasury Secretary on Debt Ceiling

ABA Chief Economist Jim Chessen attended a meeting Friday with Treasury Secretary Jack Lew and a dozen financial and business trade group leaders about the debt ceiling. The meeting was part of a dialogue Lew has initiated on the seriousness of the country’s fiscal situation and the implications of a breach of the debt ceiling.

Chessen provided examples of how a default would impact banks and the economy at large. He noted, for instance, that because banks hold nearly $2 trillion in Treasury securities and over $1.5 trillion in agency securities, any interest rate increase that would result from a delay in payment or default would create large unrealized losses in bank portfolios. That, in turn, would restrict the industry’s ability to lend and grow the economy.

View graphs about the debt ceiling.

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