SIFMA's Gregg optimistic that default can be avoided

The head of a major Wall Street trade association expressed optimism Friday that congressional leaders and the Obama administration can reach a budget agreement that will lift the debt ceiling. “Things are moving away from a default,” Judd Gregg, chief executive of the Securities Industry and Financial Markets Association, said in a media conference call. On Friday morning, House Speaker John Boehner, R-Ohio, began a meeting with his Republican colleagues by saying that the party would not allow the debt ceiling to be breached, according to an aide to one of the lawmakers in attendance. The Treasury Department has indicated that the $16.7 trillion debt ceiling must be raised by Oct. 17 or the agency will run out of funds to service the nation's obligations. A deadlock over the federal budget has led to a government shutdown that began on Oct. 1. The budget impasse is threatening to continue beyond the debt deadline. In a report on Thursday, the Treasury Department predicted that a default would cause a spike in interest rates and a stock market decline, among other setbacks. Mr. Gregg is encouraging Congress to avoid that outcome by working out a deal that addresses the budget, sequestration, debt ceiling and entitlement and tax reform. “I would hope that they will reach some kind of mini-grand bargain,” said Mr. Gregg, a former New Hampshire senator and governor. Over the past few days, SIFMA has been among the most vocal business organizations warning Congress not to violate the debt ceiling. “A default is unacceptable,” Mr. Gregg said. SIFMA has been examining how the financial markets might react in the event of a U.S. debt default. “No scenario is clean, and some scenarios are catastrophic,” said Rob Toomey, SIFMA's managing director and associate general counsel.