Dan Berger, the president and CEO of the National Association of Federal Credit Unions, urged lawmakers last week to address the federal debt limit before the Oct. 17 deadline, after which the U.S. Treasury said the country risks default.
The Senate Banking Committee held a hearing on the issue last Thursday, during which representatives from the American Bankers Association, Securities Industry and Financial Markets Association, National Association of Realtors and Investment Company Institute testified.
In a letter to the committee, Berger said it remains “critical” that lawmakers take action to resolve the debt limit issue before the deadline.
“Failure to address the debt ceiling would threaten growth and recovery, deter investor confidence in the United States and breed uncertainty on a global scale,” Berger said. “Financial institutions of all sizes, including credit unions, need to have certainty and stability in order to meet the credit needs of consumers across the country.”
Berger also said that while the organization “understand[s] and recognize[s]” efforts by both Democrats and Republicans to put forth recommendations to improve the country’s financial situation, default would put financial markets at risk and would come with “a host of unintended consequences.”
U.S. Treasury Secretary Jack Lew discussed similar concerns in a separate hearing before the Senate Finance Committee, saying the debt limit has “nothing to do with new spending.”
“It has to do with spending that Congress has already approved and bills that have already been incurred,” Lew said. “Failing to raise the debt limit would not make these bills disappear. The President remains willing to negotiate over the future direction of fiscal policy, but he will not negotiate over whether the United States should pay its bills.”
Lew told the committee that the Obama administration would be open to a short-term extension of the debt ceiling to avoid default.