Wall Street braces for US default
Source: AFP
US banks have begun making contingency plans for what to do if the US government defaults on its debt or loses its triple-A credit rating, banking sources and analysts said.
But the conventional wisdom on Wall Street is that Washington’s feuding politicians will still reach a last-minute deal and avert a default, an outcome that President Barack Obama has warned would be economic “Armageddon”.
“The anecdotal evidence I’ve heard is that folks are beginning to take steps in case it happens,” a former Federal Reserve official with extensive contacts in the banking industry told AFP.
Bank of America, Wells Fargo and Citigroup confirmed that they were making plans on how to minimize the damage of a government default or downgrade.
Seeking to reclaim leadership on debt talks, President Obama on Monday night made a last-minute strenuous pitch that tax increases to be included in any deal, but Republicans’ top negotiator, House Speaker John A. Boehner, said the president himself is now the chief roadblock to reaching an agreement.