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


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 made the remarks during his speech at the International Swaps and Derivatives Association Annual Meeting Wednesday. He stressed: “We’ve already seen an effect in the pricing and liquidity of short-dated Treasury bills and continue to monitor for any additional tremors.”

Gensler added: “If an issuer defaulted, the effects would be very long-lasting, difficult to predict and significant for investors, issuers and markets. In a word, it would make the Cyclone Roller Coaster at the 1933 Chicago World’s Fair look like a kiddie ride.” He also noted: “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.”

U.S. Treasury Secretary Janet Yellen also warned about the “catastrophic” consequences of defaulting by the United States on its debt obligations.

What do you think of SEC Chairman Gary Gensler’s warning regarding the impact a U.S. default would have on capital markets? Let us know in the comments.

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