On Wednesday, top executives from the financial industry will have a chance to sit down with President Obama and talk shop. Reuters reports that a White House official told The Wall Street Journal the “president will meet members of the Financial Services Forum at the White House while they are in town for their annual meeting.” An industry participant told the Journal that the group of executives — including JPMorgan Chase (NYSE:JPM) Chairman and CEO Jamie Dimon — are likely to raise concerns over the debt ceiling.
The news is interesting, although not necessarily surprising. Obama meets with business leaders fairly regularly to discuss economic issues that affect the business and financial environment, and, combined with the recent shutdown, this is exactly the right time to sit down with the country’s top bankers.
As far as the Financial Services Forum is involved, attendees routinely weigh in on political and fiscal issues that affect the financial industry. For example, in 2011 — the last time the U.S. was staring down the possibility of defaulting on its obligations — the FSF sent a letter signed by the CEOs of dozens of major businesses, including JPMorgan’s Dimon, urging Obama and Congress to action.
The language from the FSF’s 2011 letter still feels appropriate. The FSF argued that “it is vitally important for the US government to make good on its financial obligations and to put its fiscal house in order.
“Treasury securities influence the cost of financing not just for companies but more importantly for mortgages, auto loans, credit cards and student debt,” the FSF explained. “A default would risk both disarray in those markets and a host of unintended consequences. The debt ceiling trigger does offer a needed catalyst for serious negotiations on budget discipline but avoiding even a technical default is essential. This is a risk our country must not take.”
On Tuesday, the yield on the 10-year Treasury increased as much as 0.031 points to 2.646 percent. This is still well below the nearly 3 percent rate at the beginning of the month, when the atmosphere was thick with taper talk, but could still put upward pressure on lending rates.