High-profile Wall Street CEOs are meeting at the White House today, something that could test corporate America's ability to resolve the impasse on the federal debt and government shutdown by influencing House Republicans and countering tea party hardliners.
President Barack Obama is scheduled to meet Wednesday with the corporate executive members of the Financial Services Forum, which is an economic policy group representing the CEOs of the 19 largest banking and insurance firms. The CEO's visiting the White House to discuss the government budget and federal debt include Jamie Dimon of JPMorgan, James Gorman of Morgan Stanley, Brian Moynihan of Bank of America, and Lloyd Blankfein of Goldman Sachs, according to Politico.
The CEOs will also meet with other lawmakers including Treasury Secretary Jacob Lew, sources told Bloomberg.
Congress failed to reach a compromise at the eleventh hour before its 11:59 p.m. deadline on Monday, as Democrats and Republicans remained bitterly divided as to whether to defund the Affordable Care Act as part of a bill that would keep the government running. If a solution is not reached to raise the federal debt ceiling by Oct. 17, then the financial markets might lose faith in the ability of the U.S. to pay its bills, which could lead to higher interest rates in numerous sectors including mortgages, credit cards and auto loans.
Corporate campaign donations are a major bargaining chip that Wall Street could use to pressure the GOP into action, says Larry Sabato, director of the University of Virginia's Center for Politics. The Wall Street CEOs "have no influence at all on the tea party members of the House," Sabato says, adding that the CEOs can still make a difference by reaching out to Republican leaders including House Speaker John Boehner, R-Ohio.
"If the CEOs make enough calls to key leaders like Boehner and say 'either you end the shutdown now or we pull all of our campaign contributions for 2014,' that would have an impact," Sabato says. "There already is a split between corporate America and the tea party group, and the government shutdown will cause it to grow."
But, on the other hand, tea party members of the House might have a greater chance of being insulated from criticism about a government shutdown and could even be praised for their stance against the Affordable Care Act when they face Republican primary contenders in 2014, Sabato says. Republicans who represent districts that Obama won in 2008 and 2012 could be more vulnerable to face voter backlash as most voters are blaming the GOP for the government shutdown, Sabato says. Democrats are also unlikely to agree to any compromise that seriously affects the Affordable Care Act, he added.
Approximately 72 percent of voters oppose shutting down the government in order to block or weaken the Affordable Care Act, according to a Quinnipiac University poll released Tuesday.
The meeting between Wall Street CEOs and the White House could at least give Obama the political perception of being on the side of big business during this federal shutdown, says James Angel, an associate professor at Georgetown University who specializes in the study of financial problems.
The most likely solution that could be reached on the budget and the debt ceiling is "a face-saving deal for the Republicans that merely pushes the problem off a few weeks or months," Angel says.
"Obama would benefit from having Wall Street put pressure on the GOP, and in return for that political favor, Wall Street might want to get something in return. Exactly what that is remains to be seen," Angel says.