March 2, 2021

A Mobilization in Washington by Wall Street

Wall Street is no longer watching from the sidelines as the most polarizing political fight in years plays out on Capitol Hill. In the last few days, top executives have been in close contact with Washington in a last-ditch attempt to prod lawmakers toward a compromise by Tuesday, the administration’s deadline to reach a deal.

On Friday, Jamie Dimon, JPMorgan Chase’s chief executive, raised concerns with Treasury Secretary Timothy F. Geithner about the standoff over the debt ceiling and its potential to disrupt the system through which JP Morgan and other big banks disburse federal payments. Mr. Geithner assured him that the Treasury and Federal Reserve had taken steps to keep the payment system functioning smoothly, according to individuals briefed on the call.

In addition, more than a dozen chief executives from the nation’s biggest financial services firms wrote a joint letter to President Obama and members of Congress on Thursday warning of “very grave” consequences for the economy and the job market if an agreement wasn’t reached.

It’s not just chief executives who are now doing the talking, either.

Bankers have deluged Congressional staff members with research reports outlining the bleak consequences of a default, or even a downgrade of United States government debt by the major rating agencies. And in corporate America’s version of grassroots mobilization, Allstate e-mailed 45,000 employees urging them to call their local members of Congress and demand a deal.

Hedge fund managers, normally among Wall Street’s most secretive tribes, have been stepping out of the shadows, too.

Marc Lasry, a major Democratic fundraiser who manages the $14 billion Avenue Capital hedge fund, said he spoke to half a dozen members of Congress from both parties on Thursday and Friday with blunt warnings that failure to compromise on the debt ceiling risked permanently damaging the nation’s financial standing.

“Over the last couple of weeks, everybody assumed it would get done,” said Mr. Lasry. “It’s only in the last couple of days that I’ve gotten worried it might not.”

Not since 2008 have federal officials and bankers been so clearly aligned in their push for the same policies. Back then, the industry and regulators pressed Congress to pass legislation allowing the federal bank bailout at the height of the financial crisis.

“They both have the same interests at the end of the day,” said Tom Block, a consultant and formerly the global head of government relations at JPMorgan Chase. “They both want the banking system to be safe and sound.”

To be sure, with market turbulence almost certain to follow a default, Wall Streeters also want to safeguard bank profits and their own bonuses. Nevertheless, for much of the spring and early summer, while battle lines were being drawn by Republican and Democratic lawmakers, financial executives mostly stayed out of the fray.

According to lobbyists and executives, banks believed the two sides in Washington would ultimately find a way to make a deal. Plus, there were worries that being too outspoken might spook the financial markets. Most important, with the industry’s image in tatters in the wake of the financial crisis and subsequent bailout, some bankers feared their involvement might actually be detrimental.

“Every time Wall Street raises its head, there are a lot of people ready to chop it off,” said one senior banking industry official.

But as the deadline approached, anxiety began to take hold. A turning point came on July 11, when top officials from some of Wall Street’s most powerful lobbying groups filed into an ornate conference room opposite Mr. Geithner’s office on the third floor of the Treasury Building to make their case about the danger of inaction.

Several of the representatives, like Frank Keating of the American Bankers Association and John Engler of the Business Roundtable, were former governors with deep political connections. Others, including Robert S. Nichols of the Financial Services Forum and Leigh Ann Pusey of the American Insurance Association, are among the most powerful lobbyists in Washington.

“Everyone was on the same page,” said Mr. Nichols. “We all said this had to get done and it was urgent.”

Mr. Geithner told the group that anything they could do to get the debt ceiling lifted would be helpful, according to Mr. Nichols.

Louise Story and Julie Creswell contributed reporting.

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