For months, even years, we've heard President Obama fear monger in order to get his unpopular policies shoved through Congress, but the past week has been especially overloaded with scare tactics as President Obama said "we may default," last week, and who could forget the "granny won't get her Social Security check," statement.
Conveniently, the Obama Administration has been telling executives at the big banks a different story:
While officials from the Obama Administration raised their rhetoric over the weekend about the possibility of a debt default if the debt ceiling isn't raised, they privately have been telling top executives at major U.S. banks that such an event won’t happen, FOX Business has learned.
In a series of phone calls, administration officials have told bankers that the administration will not allow a default to happen even if the debt cap isn't raised by the August 2 date Treasury Secretary Tim Geithner says the government will run out of money to pay all its bills, including obligations to bond holders. Geithner made the rounds on the Sunday talk shows saying a default is imminent if the debt ceiling isn't raised, and President Obama issued a similar warning during a Friday press conference after budget negotiations with House Republicans broke down.
A senior banking official told FOX Business that administration officials have provided guidance to them that even though a default is off the table, a downgrade "is a real possibility for no other reason than S&P and Moody's have to cover (themselves) since they've been speaking out on the debt cap so much."
This guidance is a big reason why Wall Street has largely dismissed the possibility of default, and though the markets have been jittery amid the talk of default, they haven't imploded as would be the case, many economists fear, if the nation missed a payment on its debt.
So there you have it folks, President Obama is more than happy to threaten the American people when it comes to the debt crisis, but behind their back he's slipping big banks a handshake.
|Katie Pavlich is the News Editor at Townhall.com. Follow her on Twitter @katiepavlich. She is also the author of Fast and Furious: Barack Obama's Bloodiest Scandal and the Shameless Cover-Up.
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Author Photo credit: Jensen Sutta Photography