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October 18, 2012
To the President and Members of Congress:
We write today to urge you to work together to reach a bipartisan agreement to avoid the approaching “fiscal cliff,” and take concrete steps to restore the United States’ long-term fiscal footing. The consequences of inaction – for stability in global financial markets, for economic growth, for millions of Americans still without work, and for the financial circumstances of American businesses and households – would be very grave.
Federal Reserve Chairman Ben Bernanke has warned that the fiscal cliff would push the U.S. economy back into recession “and about 1.25 million fewer jobs would be created in 2013.” At a press conference on September 13, 2012, Chairman Bernanke stated that no amount of quantitative easing can offset the impact of the fiscal cliff.
On August 22nd, Doug Elmendorf, Director of the Congressional Budget Office, said that the economy is already being “held back” by the mere anticipation of the fiscal cliff and the uncertainty surrounding it, as many businesses are putting off investment and hiring decisions. “The sooner that uncertainty is eliminated, the better,” he said.
On September 11th, Moody’s Investor Service warned that if upcoming fiscal negotiations do not “lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term,” Moody’s will downgrade the United States’ AAA credit rating. Another downgrade of our nation’s debt by a major rating service (S&P lowered its rating of U.S. debt on August 6, 2011) could lead to significantly higher interest rates. Higher interest payments would worsen our nation’s fiscal burden and likely increase uncertainty and instability in global financial markets.
At a time when economic growth is less than 2 percent, and with nearly 25 million Americans either out of work or underemployed, the still-fragile U.S. economy cannot sustain – and the American people do not deserve – the impact of more gridlock in Washington. We urge you to negotiate a bipartisan agreement as quickly as possible to prevent us from going over the fiscal cliff so that we can avoid the damage to the economy and the markets that inaction will cause.
But merely avoiding the fiscal cliff is not enough. We further urge you and your colleagues to enact legislation that truly restores the nation’s long-term fiscal soundness.
The U.S. economy and the businesses and households that depend on it need your help. Even more important, the solvency, productive capacity, and stability of the United States, as well as its moral authority as a global leader, require that its fiscal challenges be credibly met. We trust that you will do everything you can to deliver the necessary leadership at this crucial time.
Chairman, President and CEO Allstate Insurance Company
Brian Moynihan CEO
Bank of America
Chairman, President and CEO BNY Mellon
Chief Executive Officer Citigroup
Brady Dougan CEO
Co-Chairman of the Management Board &
Group Executive Committee Deutsche Bank
James Weddle Managing Partner Edward Jones
Lloyd Blankfein Chairman and CEO
The Goldman Sachs Group, Inc.
Jamie Dimon Chairman and CEO
JPMorgan Chase & Co
Chairman, President and CEO MetLife, Inc.
James Gorman Chairman and CEO Morgan Stanley
John Strangfeld Chairman and CEO Prudential Financial, Inc.
Chairman, President and CEO State Street Corporation
Sergio Ermotti Group CEO UBS AG
Chairman, President and CEO Wells Fargo & Company
Robert Nichols President and CEO
Financial Services Forum