Obama Telling Banks That U.S. Will Not Default

According to a

from Fox Business Network's Charlie Gasparino, President Obama has been privately telling top bankers that the United States will not default, even as he steps up his rhetoric over the debt ceiling negotiations. While the Obama Administration cannot be sure that a deal to raise the debt cap will be reached by August 2, it does appear as if they will have enough cash to avoid an outright default. A senior banking official who was quoted in Gasparino's report said that "They also know they can pay the debt with cash on hand." This is what the President's officials are telling the big banks anyways. This, despite the fact that Obama has been issuing warnings saying that if a deal isn't passed by August 2, the country will default on its obligations. While a default, in any shape or form, appears to be unlikely, the same cannot be said for a U.S. ratings downgrade. The senior banking official in the Fox Business Network report said that senior people in the Obama administration have told him that 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."