Arab Today, arab today wall street braces for us default
Last Updated : GMT 19:03:03
Arab Today, arab today
Arab Today, arab today

Wall Street braces for US default

Arab Today, arab today

Arab Today, arab today Wall Street braces for US default

New York - 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. \"While we have confidence our legislators will reach a resolution, our contingency planning is focused on ensuring we will able to meet our customers\' needs should an agreement not be reached,\" a Wells Fargo spokeswoman said. Bank of America said it was \"working through a variety of contingency plans\" while Citigroup said it had been \"continuously preparing for a scenario where the US debt limit is not raised\". None of the banks though would detail their strategies. Obama and the US Treasury have said Congress must raise the government\'s $14.29 trillion debt ceiling by August 2 to prevent a default, but Democrats and Republicans remained deadlocked Monday amid bitter disagreements over tax increases and spending cuts. The Wall Street Journal reported last week that major US banks were spending hundreds of hours preparing contingency plans for worst-case scenarios. Some banks have been sketching out plans to raise more and more cash as the August 2 deadline approaches to bolster liquidity in case of a crisis, said Lou Crandall, chief economist for Wrightson ICAP. Still, US banks are so exposed to, and dependent on government debt that there is little they can do. \"Treasuries are unique,\" Crandall said. \"Nothing can take their place.\" For decades, US Treasury bonds were viewed as the ultimate safe-haven asset, and banks held a large part of their capital in them or other US government securities. They are also widely used as collateral in various transactions. US banks owned $1.66 trillion in US government securities in June, the last month for which data was available, according to the Federal Reserve. By comparison, China held $1.16 trillion as of May. In theory, banks have several options for how to hedge the value of their Treasuries. For instance, they may buy credit-default swaps (CDS), which are essentially insurance contracts that pay out in case of a default. The CDS price for one-year Treasuries has roughly doubled since mid-May, but remains very low. Banks could also bet on a decline in the US dollar, which is likely to drop sharply after a default or a downgrade. \"A three- to five-percent decline in the dollar might result from a technical default in terms of US Treasury debt, and that\'s a contingency that I think many investors are taking into account,\" Bill Gross, founder of Pimco, the world\'s largest bond fund, told National Public Radio last week. But analysts stress that a default, or even a downgrade, could cause deep damage to banks\' balance sheets, and their options for hedging against such a scenario are limited. \"What can you do about it? Not a God-damn thing!\" said Dick Bove, a banking analyst with Rochdale Securities. \"It would just overwhelm the American banking system, so all they can do is sit and wait.\"

arabstoday
arabstoday

GMT 12:25 2017 Saturday ,23 September

ThyssenKrupp steelworkers protest against Tata tie-up

GMT 06:49 2017 Wednesday ,20 September

Equifax says 100,000 Canadians' data hacked

GMT 03:57 2017 Tuesday ,19 September

Canadian GM workers in walkout

GMT 07:02 2017 Monday ,18 September

Zombie firms on the march as rate hikes near: BIS

GMT 06:05 2017 Monday ,18 September

Serbian workers rebel against foreign bosses

GMT 06:41 2017 Saturday ,16 September

France slams Silicon Valley for skirting tax in Europe

GMT 19:14 2017 Wednesday ,30 August

Workers strike at VW plant in Portugal
Arab Today, arab today
Arab Today, arab today

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today wall street braces for us default Arab Today, arab today wall street braces for us default

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today wall street braces for us default Arab Today, arab today wall street braces for us default

 



Arab Today, arab today
Arab Today, arab today Youssra depended on colored foam

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today Sheraton Grand Hotel reveals its deals

GMT 12:20 2017 Monday ,25 September

Sheraton Grand Hotel reveals its deals
Arab Today, arab today Etiquette expert underlines importance of gifts

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts
Arab Today, arab today Iraq Kurds in historic independence vote

GMT 15:20 2017 Monday ,25 September

Iraq Kurds in historic independence vote
Arab Today, arab today North Korea 'more opaque'

GMT 10:50 2017 Sunday ,24 September

North Korea 'more opaque'
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Ministry seeks to improve education

GMT 14:49 2017 Sunday ,17 September

Ministry seeks to improve education
Arab Today, arab today 'Lady Beast' fights for girl gamers

GMT 10:27 2017 Sunday ,24 September

'Lady Beast' fights for girl gamers
Arab Today, arab today Conditions growing dire    

GMT 09:22 2017 Monday ,25 September

Conditions growing dire    
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Chevrolet's first 9-speed auto debuts

GMT 18:58 2017 Monday ,25 September

Chevrolet's first 9-speed auto debuts
Arab Today, arab today Third generation adds more power

GMT 13:40 2017 Sunday ,24 September

Third generation adds more power
Arab Today, arab today Lebleba is preoccupied in filming 'Back Street'

GMT 08:56 2017 Thursday ,21 September

Lebleba is preoccupied in filming 'Back Street'
Arab Today, arab today Psychologists help Mexico deal

GMT 05:05 2017 Sunday ,24 September

Psychologists help Mexico deal

GMT 08:59 2017 Wednesday ,20 September

Youssra prepares for launching her program

GMT 10:16 2017 Friday ,22 September

All eyes on May as she prepares

GMT 16:53 2017 Saturday ,02 September

Mai importance of gifts during Eid Al-Adha

GMT 20:10 2017 Saturday ,23 September

Big Western brands polluting oceans

GMT 10:46 2017 Saturday ,05 August

Nanis reveals simple ideas for home renovation

GMT 12:02 2017 Sunday ,24 September

Harry visits mental health hospital

GMT 11:11 2017 Sunday ,24 September

The dark side of new tourism hope

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 12:46 2017 Thursday ,21 September

Google likely to buy stake in Taiwan smartphone maker HTC

GMT 11:37 2017 Saturday ,12 August

Fashion designer reveals her new collection
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday