SEC Chair Warns US Default Would Have ‘Significant’ and ‘Lasting Effects’ on Investors, Markets

Securities and Exchange Commission (SEC) Chairman Gary Gensler has warned that the U.S. Treasury defaulting on its debt obligations “would have very significant, hard to predict, and likely lasting effects on investors, issuers, and markets alike.” Gensler careworn: “We’ve already seen an effect in the pricing and liquidity of short-dated Treasury bills and continue to monitor for any additional tremors.”

SEC Chair Gary Gensler on U.S. Debt Default

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has weighed in on the impression a U.S. default would have on capital markets as discussions of the U.S. defaulting on its debt obligations warmth up in Congress.

“I’d like to say a few words regarding the ongoing discussions in Washington around the debt ceiling,” the SEC chairman mentioned in his remarks earlier than the International Swaps and Derivatives Association annual assembly Wednesday. Gensler cautioned:

If the U.S. Treasury as an issuer had been truly to default, it could have very important, laborious to foretell, and certain lasting results on buyers, issuers, and markets alike.

“In a word, it would make the Cyclone Roller Coaster at the 1933 Chicago World’s Fair look like a kiddie ride,” he careworn.

The SEC chairman additionally clarified: “While we at the SEC have no direct role in those discussions, the outcome is directly consequential to each part of our mission: protecting investors, facilitating capital formation, and maintaining fair, orderly, and efficient markets.”

He added:

We’ve already seen an impact within the pricing and liquidity of short-dated Treasury payments and proceed to watch for any further tremors.

U.S. Treasury Secretary Janet Yellen revealed final week that the Treasury Department could not be capable of pay all the authorities’s payments as early as June 1 “if Congress does not raise or suspend the debt limit before that time.” She also warned of “catastrophic” penalties of the U.S. defaulting on its debt obligations.

What do you concentrate on SEC Chairman Gary Gensler’s warning relating to the impression a U.S. default would have on capital markets? Let us know within the feedback part beneath.