Obama to Banks: We're Not Defaulting

[PoliticAverse]

Source: Fox Business News


While officials from the Obama Administration raised their rhetoric over the weekend about the possibility of a debt default if the debt ceiling isn't raised, they privately have been telling top executives at major U.S. banks that such an event won’t happen, FOX Business has learned.

In a series of phone calls, administration officials have told bankers that the administration will not allow a default to happen even if the debt cap isn't raised by the August 2 date Treasury Secretary Tim Geithner says the government will run out of money to pay all its bills, including obligations to bond holders. Geithner made the rounds on the Sunday talk shows saying a default is imminent if the debt ceiling isn't raised, and President Obama issued a similar warning during a Friday press conference after budget negotiations with House Republicans broke down.



Read more: http://www.foxbusiness.com/markets/2011/07/25/obama-to-banks-were-not-defaulting/?cmpid=cmty_twitter_foxbusiness_obama-to-banks-were-not-defaulting

[sinkingfeeling]

1. I don't believe anything that comes from fox business.

[PoliticAverse]

6. That's certainly understandable, but this story is by Charlie Gasparino...

who has some pretty good sources and has written a lot of good pieces covering
wall street scandals.

[left on green only]

8. Sorry To Seem Pragmatic

But nothing that anyone has to say who is even remotely connected with Faux News can be either believed or trusted. It is propaganda, not news.

[murielm99]

2. This is still Fox. n/t

[abelenkpe]

3. But Greece will nt

[Evasporque]

4. They hacked the voice mail of Banking CEOs to get that scoop....nt

[HopeHoops]

5. Do you have a link to a real news source?

[Cool Logic]

7. Duh...Tell us something else we don't know.

[caseymoz]

9. I think if a deal can't be reached, Obama will take the "nuclear option."

He and Democrats in Congress will declare debt ceiling unconstitutional, as was discussed before. It's not a step he'd like to take though, but it's the one they should have taken first thing when it became apparent Repubs were going to play chicken with it.

The debt ceiling was an idiot button waiting to be pressed anyway.

[AndyTiedye]

16. It Would Have Been, If There Were Any Chance the Supremes Would Let Him Do It

The Supreme Court would have another "Bush v. Gore moment" and rule that Obama could not do that.
They would make it non-precedent-setting, like Bush v. Gore, so they would be free to rule the
other way in the future when there is a Republican President.

[caseymoz]

17. Perhaps, but . . .

It would likely get them past this dispute at least until the SCOTUS could rule on it.

More than that, since the debt ceiling is literally, not a law but a rule Congress has made for itself which, I think, hasn't been signed into law by the President, it's hard to see how a rule of Congress can be allowed to have any effect outside of Congress. He might be able to make the argument that Congress has made an all-encompassing law without sending it to him for signing. To my non-legal mind, that sounds like a very strong argument.

He would need the Dems in Congress to go along with it. Like if the Senate votes to dissent from the ceiling, then the argument gets even stronger.

Either way, it would take the ceiling off at least temporarily, and I don't think even Scalia would have the balls to issue an injunction against the action until it's adjudicated. That would at least get us over this crisis. Next year would be something else.

[AndyTiedye]

20. They Would RUN to Scalia, Who Has a Ruling in His Back Pocket All Ready to Sign

It would take less than 30 minutes.

[caseymoz]

21. Sounds like that might be a bluff.

I'd call it.

[banned from Kos]

10. Banks are large holders of Treasuries that they use as collateral

for Fed loans and many other things.

Last thing we need is a bank panic.

[girl gone mad]

11. Yep.. fake crisis.

It would be the height of irresponsibility for the administration not to have a back up plan in place.

Ginning up hysteria in order to push through economically disastrous spending cuts is blatant neoliberal financial engineering.

[PoliticAverse]

15. "Never let a crisis go to waste"... n/t

[mike_c]

12. I don't believe anything that comes from FOX news OR the White House, frankly....

One makes shit up outright and the other, um..., WOW! DID YOU SEE THAT?! IT'S A shiny object distraction CRISIS!

[lumberjack_jeff]

13. What mean "WE", Kemosabe? n/t

[FarCenter]

14. The 14th ammendment to the constitution requires that Obama not default on the debt

The due principle and interest on the US debt will be paid before anything else.

[boppers]

18. Article 1, Section 8, gives the pursestrings to Congress....

The Liberty Bond Act established the basic framework for Congress setting the upper limit, and the Public Debt Acts continued to reinforce it.

The problem with the 14th Amendment argument is as follows:
"Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article."

Obama can't create new levels of authorization. Of course, the counter argument is that the budgets which incurred said debt were a prior form of legal authorization, but then we're back to the Liberty Bond Act and the Public Debt Acts.

[roomfullofmirrors]

19. The check is in the mail, I swear.

[LetTimmySmoke]

22. So he's got the 14th amendment order up his sleeve.

What else is new?