May 15, 2023
Chair Gensler Gives Dire Warning About Debt Ceiling
In his remarks before the International Swaps and Derivatives Association Annual Meeting on May 10, SEC Chair Gary Gensler gave his two cents on the debt ceiling, and I can’t say they’ll help me sleep better at night. Here’s what he said:
Before I close, I’d like to say a few words regarding the ongoing discussions in Washington around the debt ceiling.
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.
We’ve already seen an effect in the pricing and liquidity of short-dated Treasury bills and continue to monitor for any additional tremors.
If the U.S. Treasury as an issuer were actually to default, it would have very significant, hard to predict, and likely lasting effects on investors, 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.
– Meredith Ervine