US financial regulators meet on debt ceiling worries

US Treasury Secretary Jacob Lew convened a high-level panel on financial stability Tuesday as worries mounted that Washington's political paralysis would force the country into default. Lew chaired a closed teleconference of the Financial Stability Oversight Council to discuss the threat of Congress's failure to raise the $16.7 trillion debt limit, which could leave the Treasury short of cash by October 17. The FSOC comprises representatives of the top financial regulators, including the Federal Reserve, the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Federal Deposit Insurance Corporation. The Treasury said in a statement that the group discussed what they "are hearing from their regulated entities and other market participants" regarding the impact of the partial government shutdown and the looming debt ceiling deadline. In addition, it said, the heads of the CFTC and SEC discussed how the shutdown, forced by US lawmakers not agreeing a budget for the current fiscal year, had affected their abilities to monitor and respond to market events. "Failure to raise the debt limit by October 17 would place the United States government in the untenable position of operating with only the cash on hand and could severely impact financial markets and the broader economy," a Treasury spokesman said in a statement. The Treasury also said the FSOC could meet again in the coming days. Lew has warned repeatedly over the past week that the Treasury would exhaust all means to operate under the debt ceiling by October 17. With a chronic deficit of around $60 billion a month, not being able to borrow more could force the Treasury to default on some obligations. The Treasury and the White House have refused to say what kind of payments might be prioritized, amid worries the country could be forced to choose between making interest payments on its debt and sending social security checks to retirees. Asked Tuesday what the choice would be, President Barack Obama replied: "No option is good in that scenario... We are exploring all contingencies."