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Top banker: Shutdown hurts 'shallow' recovery

Oct. 2, 2013 at 6:45 PM   |   Comments

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WASHINGTON, Oct. 2 (UPI) -- The head of a trade group representing U.S. bankers said Wednesday the federal government shutdown will hurt what he called a "shallow recovery" from recession.

Goldman Sachs Chairman and Chief Executive Officer Lloyd Blankfein, speaking after he and more than a dozen other top financial executives met at the White House with President Barack Obama, said he and his peers told the president the long-term consequences of a federal government shutdown -- now in its second day -- will be "extremely adverse" if Congress fails to authorize an increase in the federal debt limit, CNN reported.

"There's a consensus that we shouldn't do anything that hurts this recovery that's a little bit shallow, not very well established and is quite vulnerable," said Blankfein, who currently serves as head of the Financial Services Forum. "The shutdown of the government and particularly, a failure to raise the debt ceiling, would accomplish that."

The Treasury Department has said it will run out of money to pay the government's obligations around Oct. 17.

"We shouldn't use the threat of causing the U.S. to fail on its obligations to repay its debt as a cudgel," Blankfein said.

Obama told CNBC in an interview Wednesday he told the Wall Street executives they "should be concerned" by the shutdown, even though the government has done through numerous shutdowns in the past.

"This time's different," he told CNBC. "When you have a situation in which a faction is willing to potentially default on U.S. government obligations, then we are in trouble."

Obama said all businesses should be concerned if budget negotiations are still being conducted during the Christmas shopping season, suggesting such a circumstance could dampen consumers' enthusiasm for spending.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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