Fellow Fridays is a series of profiles of BPC's roster of 14 senior fellows. This week, we are sharing commentary and opinions from the senior fellows regarding the shut down.
With the government shutdown entering its second week, the market has become increasingly unsettled as many standard economic data reports continue to go unpublished. This only adds to the uncertainty surrounding the approaching debt limit deadline.
BPC has received numerous inquiries about whether Treasury could delay the X Date – the date on which the United States will be unable to meet all of its financial obligations in full and on time – by extending the Debt Issuance Suspension Period (DISP) beyond October 17, when it is now set to end. This question raises very complicated issues, but the short answer is that the proposed approach is questionable on legal grounds and would buy very limited time.
On Tuesday, the Treasury Department announced auction results for 4-week Treasury Bills that will come due on November 7, 2013. The interest rate, determined by competitive bidding, is 0.35 percent. While this sounds low when compared to typical consumer interest rates, it is significantly higher than the previous 4-week Treasury Bill auction, which was sold at a rate of 0.12 percent on October 3. As recently as September 17, 4-week Treasury debt was auctioned at a zero percent interest rate, meaning that investors were willing to accept no return based on the perception that U.S. Treasury debt is the safest place to keep their money.
Updated data on Treasury cash flows through the first week of October show that the range for BPC's X Date – the date on which the United States will be unable to meet all of its financial obligations in full and on time – has narrowed to between October 22 and November 1. The updated range is consistent with BPC’s earlier estimate.
When the Director of National Intelligence James Clapper testified last week that the shutdown “seriously damages” our nation’s security, we must pay attention. He claims that approximately 70 percent of intelligence officials are furloughed, but the threats that emerge from the shutdown are abundant: whether due to lack of coordination, caused by those not allowed to do their important jobs; or the possible recruitment by our adversaries of a particularly disaffected laid off worker.
The Consumer Financial Protection Bureau: Measuring the Progress of a New Agency
By Rick Fischer and Eric Rodriguez, co-chairs of the Financial Regulatory Reform Initiative’s Consumer Protection Task Force
“Overall, the report concludes that when the Bureau operates in a transparent, open, and iterative manner, repeatedly seeking input from all stakeholders throughout a process, the results were generally positive. The Bureau was able to meet its statutory deadlines on a series of complex rules, while considering comments and revising initial findings to improve the final product. However, when the Bureau made unilateral decisions, rolled out initiatives, rules, or processes through a more closed, internal deliberation process, the results were far more likely to be problematic.”
Fellow Fridays is a series of profiles of BPC's roster of nine Senior Fellows. This week, we are sharing excerpts from Senator Olympia Snowe’s book, Fighting For Common Ground.
In this timely piece, she shares her passion for healthy debates and draws from the valuable lessons she learned about principled, bipartisan compromise.
Our federal financial regulatory system was set up to emphasize independence for our regulatory agencies. A number of reasons justify that philosophy, not least of which is a desire to insulate these agencies from the political pressure they come under from all sides, particularly during crises. We want our regulators—analogous to cops on the beat protecting consumers, investors, and markets—to be able to make the right decisions, which are often also tough decisions. The government shutdown may end up highlighting a weak spot in our regulatory structure.