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Speaker 1: From the Bloomberg Interactive Workers' studios. This is Bloomberg day

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Speaker 1: Break for Friday, May twelfth.

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Speaker 2: Coming up today, Janet Yellen speaks out on the debt ceiling.

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Speaker 2: We bring you our exclusive interview with the Treasury Secretary.

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Speaker 1: The US graces for a record migrant sir to the

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Speaker 1: border as Title forty two comes to an.

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Speaker 2: End, signs the tensions between the US and China may

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Speaker 2: be easy.

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Speaker 1: And Elon Musk is close to naming a new CEO

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Speaker 1: at Twitter.

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Speaker 3: The man who prosecutors saying put in New York City

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Speaker 3: subway writer in a choke hold will be charged today.

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Speaker 3: Bluss Upstate New York and the city clash over bussing migrants.

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Speaker 3: I'm Michael Barber Moore. Hey, I'm John Staves Swards.

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Speaker 4: Sports losses of the Mets and Yankees. The Devil season

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Speaker 4: ended in overtime, the Knicks at Game six tonight in Miami.

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Speaker 5: That's all straight ahead on Bloomberg day Break, the Business

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Speaker 5: news You need to starn your day in just one

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Speaker 5: fifteen minute podcast each morning on Apples, Spotify, the Bloomberg Business.

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Speaker 6: App, and everywhere you get your podcasts. Good morning, I'm

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Speaker 6: Nathan Hager.

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Speaker 1: And I'm Karen Moscow. Here are the stories we're following today.

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Speaker 2: We begin in Washington, where today's debt ceiling meeting between

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Speaker 2: the President and congressional leaders has been canceled. Amy Morris

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Speaker 2: has details from our Bloomberg ninety nine one newsroom in Washington.

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Speaker 7: House Speaker Kevin McCarthy says leaders agreed it would be

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Speaker 7: more productive to let the staff continue talks behind the scenes.

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Speaker 8: The White House.

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Speaker 6: Didn't cancel the meeting.

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Speaker 8: All the leaders decided it's probably the best of our

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Speaker 8: interest to let the staff meet again before we get

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Speaker 8: back together.

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Speaker 7: Republicans say they'll agree to raise the debt ceiling in

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Speaker 7: exchange for budget cuts. The President says the cuts should

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Speaker 7: be a separate negotiation and that the current GOP proposal

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Speaker 7: is just too harsh.

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Speaker 9: He wants to cut twenty two percent of everything that

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Speaker 9: isn't defense spending, Social Security, or Medicare.

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Speaker 7: The meeting has been tentatively rescheduled for early next week.

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Speaker 7: The Treasury Department warns the US could default on payments

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Speaker 7: as soon as June first. In Washington. I'm Amy Morris,

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Speaker 7: Bloomberg Daybreak.

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Speaker 1: All right, Amy, thanks well. Plenty of talk this morning

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Speaker 1: on the consequences of not reaching a debt deal. We

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Speaker 1: spoke with Treasury Secretary Janet Yellen just moments ago.

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Speaker 10: There is no satisfactory solution for the United States, a

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Speaker 10: solution that will be good for the economy and financial markets,

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Speaker 10: other than Congress acting to raise the debt ceiling. There

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Speaker 10: are potential different paths that could be taken if that

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Speaker 10: doesn't happen, but there is not a single thing that

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Speaker 10: can be done that will save the United States from

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Speaker 10: considerable economic and financial damage.

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Speaker 1: Treasury Secretary Janet Yellen made the comments to Bloomberg's and

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Speaker 1: Marie hor Dern at the G seven meetings in Japan.

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Speaker 1: Stay tuned for the full exclusive interview coming up shortly

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Speaker 1: on Bloomberg Daybreak. Well.

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Speaker 2: Karen Jamie Diamond is also weighing in on the debt

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Speaker 2: limits stalemate. The CEO of JP, Morgan Chase, says a

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Speaker 2: US default would be potentially catastrophic.

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Speaker 11: The closer you get to it, you will panic, and

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Speaker 11: so the closes you get you have, markets get volatile.

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Speaker 11: Maybe there's Doc mar go down the Treasury. Markets will

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Speaker 11: have their own problems. It's amazing you already have certain

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Speaker 11: T bills trading three percent and right next one five percent.

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Speaker 11: This is not good and people just remember the American

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Speaker 11: financial system is the foundation to the global economics system,

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Speaker 11: and so in the closes we get more panic, we

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Speaker 11: might get downgraded.

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Speaker 2: Jamie Diamond's also chiming in on the banking crisis, telling

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Speaker 2: us it's time for regulators to help put an end

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Speaker 2: to the turmoil.

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Speaker 1: Well, Nathan, we've heard from Janet Yellen and Jamie Diamond

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Speaker 1: on the debt ceiling. Now we're learning they'll discuss the

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Speaker 1: issue together. Politico is reporting Yellen, Diamonds, City Group CEO

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Speaker 1: Jane Fraser, and other members of the Bank Policy Institute

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Speaker 1: will meet next week to discuss the debt limited pass.

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Speaker 2: Outside the debt debate, Karen focus remains on the southern border,

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Speaker 2: where the US is facing a record surge of migrants.

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Speaker 2: Title forty two restrictions ended just before midnight. Already this week,

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Speaker 2: illegal border crossings have top ten thousand. Her day, Republican

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Speaker 2: Senator Ted Cruz says the situation is overwhelming.

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Speaker 7: This is deliberate.

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Speaker 12: This is a decision that was made by President Joe

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Speaker 12: Biden and Kamala Harris and Congressional Democrats open up the

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Speaker 12: border to what is nothing less than an invasion.

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Speaker 2: Senator Cruz spoke along the border in Brownsville, Texas. The

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Speaker 2: White House says tens of thousands of border agents are

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Speaker 2: enforcing a new policy to deter illegal crossings. Democratic Congressman

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Speaker 2: Henry Quaar of Texas says the border may be little

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Speaker 2: more than a speed bump for migrants.

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Speaker 9: I'm looking at the numbers that Border Patrol has in

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Speaker 9: their facilities, and I can say this, on the average,

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Speaker 9: they're like one hundred and thirty five percent over. I

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Speaker 9: mean that is capacity.

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Speaker 2: Democrat Henry Quaar of Texas spoke with Joe Matthew and

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Speaker 2: Kaylee Lines on Bloomberg's Sound on Catch the Show weekdays

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Speaker 2: from one to three pm Eastern Non Bloomberg Radio.

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Speaker 1: Well, we turn to geopolitics now, Nathan Us China relations

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Speaker 1: are in focus. There is a glimmer of hope that

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Speaker 1: tensions may be easing a bit. And Bloomberg's Ed Baxter

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Speaker 1: has the story.

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Speaker 13: The two day meetings in Vienna between National Security Advisor

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Speaker 13: Jake Sullivan and China's Foreign Minister Wang Yi. The White

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Speaker 13: House characterizes it as substantive and constructive. The White House

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Speaker 13: statement says key issues in the US, China bilateral relationship,

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Speaker 13: global and regional security issues, Russia's war against Ukraine, and

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Speaker 13: the crosstraight issues China. Shinwa fram the meeting in a

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Speaker 13: similar way, saying the talks were constructive. The hope is

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Speaker 13: they will set the stage for a Biden She summit

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Speaker 13: in San Francisco. I'm at Baxter Bloomberg Daybreak.

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Speaker 6: Thank you, Ed.

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Speaker 2: Let's turn to some corporate news this morning. Twitter appears

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Speaker 2: to be getting a management change at the very top.

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Speaker 6: Let's get the details live from Bloomberg. Steve Rappaport, Good morning.

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Speaker 8: Steve, Good morning, Nathan and Karen.

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Speaker 3: Elon.

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Speaker 8: Musk says the next CEO of Twitter will be a woman,

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Speaker 8: Though he didn't name the successor, signs point to an

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Speaker 8: NBC Universal executive. The Wall Street Journal reports Linda Yakarino

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Speaker 8: is in talks for the job. Yakarino is chair of

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Speaker 8: Global Advertising and Partnerships at NBCUniversal Media. She helped launch

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Speaker 8: the streaming service Peacock and also oversaw high profile events

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Speaker 8: like the Super Bowl and the Olympics. Back in December,

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Speaker 8: Muskin and Twitter poll asked users if he should step down.

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Speaker 8: More than fifty seven percent said Yes Live in New York.

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Speaker 8: I'm Steve Rappaport Bloomberg Daybreak Right.

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Speaker 1: Steve, thanks, and we have economic data out of Britain

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Speaker 1: this morning. The UK economy grew slowly in the first quarter,

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Speaker 1: even though strikes sharply curtailed activity. In March, GDP was

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Speaker 1: up one tenth of one percent from the prior year,

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Speaker 1: and that left the UK on track for anemic growth

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Speaker 1: in the first half.

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Speaker 7: And this is Bloomberg, Tim.

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Speaker 2: And I to take a look at some of the

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Speaker 2: other stories making news in New York and around the world.

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Speaker 6: For that, we're joined by Bloomberg's Michael Barr. Good morning, Michael.

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Speaker 3: Good morning. Nathan, a marine veteran, will be charged today

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Speaker 3: with second degree manslaughter and the death of another subway writer.

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Speaker 3: On May first. Prosecutors in New York say Daniel Penny

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Speaker 3: used a chokehold on thirty year old Jordan Neely, who

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Speaker 3: witnesses say was acting erratically on the New York City

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Speaker 3: subway and threatening other passengers. Protesters have been in the

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Speaker 3: streets of New York since Neely's death. They were out

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Speaker 3: again last night. Activist Selena Trell.

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Speaker 14: We need accountability and that comes from the mayor and

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Speaker 14: the governor.

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Speaker 15: Because his death is on their hands on agitimizing that

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Speaker 15: type of murder.

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Speaker 3: Activist Selena trell says there was no reason to strangle

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Speaker 3: somebody to death. New York City and officials upstated are

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Speaker 3: red odds, especially now that Title forty two has ended

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Speaker 3: two bus loads and migrants have moved to a hotel

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Speaker 3: in Newburgh. It comes as city officials are busting asylum seekers.

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Speaker 3: North Residents of Rockland and Orange Counties have vowed to

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Speaker 3: do everything in their power to prevent New York City

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Speaker 3: Mayor Eric Adams from bussing the migrants. Adams sent them

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Speaker 3: up states, saying the city's resources are strained at maximum capacity.

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Speaker 3: Representative George Santos was back at work on Capitol Hill

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Speaker 3: to vote on a bill he co sponsored that would

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Speaker 3: helps states go after people who committed unemployment fraud during

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Speaker 3: the pandemic. The Long Island Republican himself was arraigned this

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Speaker 3: week on COVID unemployment fraud. South Carolina Republican Representative Nancy

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Speaker 3: Mace is one of at least twelve GOP Congress members

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Speaker 3: calling for Santos to step down or be expelled.

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Speaker 14: I was actually said in January before he was indicted

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Speaker 14: on these thirteen charges that he should resign, and I

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Speaker 14: stand by that as one of the first Republicans. We

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Speaker 14: have to police our own and hold our own accountable.

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Speaker 14: And that's what that's what we need to be doing today.

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Speaker 3: Congressman Santos has denied any wrongdoing. Donald Trump is appealing

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Speaker 3: the verdict of a New York jury that found him

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Speaker 3: liable for sexually abusing and defaming New York author E

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Speaker 3: Gene Carroll and awarded her five million dollars in damages. Yesterday,

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Speaker 3: the former president's lawyer filed a notice of appeal in

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Speaker 3: federal court in Manhattan, two days after a jury decided

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Speaker 3: against Trump. Global News twenty four hours a day, powered

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Speaker 3: by more than twenty seven i have a one hundred

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Speaker 3: journalists and analysts in over one hundred and twenty countries.

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Speaker 3: I'm Michael Barr, and this is Bloomberg. Nathan.

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Speaker 2: Okay, Michael, thanks time now for our Bloomberg Sports updates.

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Speaker 6: For that, we bring in John stash Hour. Thanks Nathan.

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Speaker 4: The NBA and NHL playoffs began with all five New

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Speaker 4: York area teams, the Nets, Rangers, and Islanders all went

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Speaker 4: out in the first round. That left the Knicks and

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Speaker 4: the Devils, who trailed three games to won Game five

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Speaker 4: at Carolina. Devils never trailed until seven minutes in just

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Speaker 4: sudden death.

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Speaker 16: Ack for drewy back to Gostas there at the left point.

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Speaker 3: Now Cooke Kenya he.

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Speaker 4: Top of the right circle. Yes, said the joy to

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Speaker 4: the Todd Ference Finals, the Trains winning three two three

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Speaker 4: over Time nine nine and Raleigh the co Also NHL

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Speaker 4: Dallas beats Seattle for a three to two lead. NBA

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Speaker 4: Denver won by twenty five at Phoenix, won the series

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Speaker 4: in six. Boston state alive with the game six win

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Speaker 4: at Philadelphia. As for the Knicks, they trailed Miami three one.

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Speaker 4: Now it's three to two, but Ken they win tonight

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Speaker 4: in Miami games three and four. There the Knicks led

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Speaker 4: for only thirty three seconds over two games. Yankees and

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Speaker 4: raise first to fourth the stadium. In a good look

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Speaker 4: at why Tampa Bay is thirty and nine. Seven scoreless

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Speaker 4: sittings from Drew Rassmussen raised broke open what was a

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Speaker 4: scoreless game in the fifth inning. They won eight to two.

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Speaker 4: They pulled away with six runs off three Yankee relievers.

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Speaker 4: The Rays are nine games ahead of the Yanks, who

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Speaker 4: will start Garrett Cole tonight. His last time out was

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Speaker 4: in Tampa and Cole couldn't hold a six run lead.

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Speaker 4: The Mets were shut out in Cincinnati five nothing. They've

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Speaker 4: lost thirteen to the last seventeen. Mike Anderson, fired by

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Speaker 4: Saint John's, has filed a lawsuits seeking forty five million

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Speaker 4: dollars thirteen in back pay thirty four more impunitive damages.

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Speaker 4: Anderson claims he was fired without cause and that Saint

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Speaker 4: John's used his buyout money to pay his successor, Rick Pettino,

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Speaker 4: John Stashellward.

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Speaker 6: Bloomberg's courts.

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Speaker 5: Live from coast to coast, from New York to San Francisco,

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Speaker 5: Boston to Washington, dcationwide on Siriusxam, the Bloomberg Business Appen

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Speaker 5: Bloomberg dot Com.

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Speaker 2: This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. The

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Speaker 2: only good outcome is raising the debt ceiling. That is

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Speaker 2: yet another warning from Treasury Secretary Janet Yellen, who is

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Speaker 2: cautioning on the catastrophic effects of a potential US debt default.

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Speaker 2: Yellen says congressional leaders are running out of time and

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Speaker 2: options to set aside their differences and find common ground

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Speaker 2: so the government can pay its bills. Janet Yellen sat

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Speaker 2: down for an exclusive interview with Bloomberg's and Marie Hoarder

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Speaker 2: this morning at the G seven gathering in Japan to

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Speaker 2: discuss the debt ceiling and other issues facing the US.

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Speaker 6: Let's bring you that discussion right now.

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Speaker 15: Unfortunately for you, in a way, what is looming over

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Speaker 15: this G seven meeting is these concerns coming out of Washington,

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Speaker 15: the debt ceiling negotiations, as well as still tremors in

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Speaker 15: the banking industry.

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Speaker 7: I want to start with the debt ceiling.

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Speaker 10: Sure, of course Wall Street is very.

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Speaker 7: Concerned about this.

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Speaker 15: There is that X state approaching that you laid out

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Speaker 15: potentially as soon as June first. But there's an assumption

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Speaker 15: on Wall Street that if there's no negotiated deal after

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Speaker 15: June first, Treasury will still maintain payments on securities. Is

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Speaker 15: that assumption correct?

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Speaker 10: Look, you know, all I can say is that there

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Speaker 10: is no satisfactory solution for the United States, a solution

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Speaker 10: that will be good for the economy and financial markets.

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Speaker 10: Other than Congress acting to raise the debt ceiling. There

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Speaker 10: are potential different paths that could be taken if that

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Speaker 10: doesn't happen. But there is not a single thing that

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Speaker 10: can be done that will save the United States from

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Speaker 10: considerable economic and financial damage.

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Speaker 15: But this planned was outlined back in twenty eleven, and

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Speaker 15: you were there at the FMC meeting about it.

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Speaker 7: It's said that.

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Speaker 15: Treasury principles and securities would be paid. Is this something

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Speaker 15: that at least for contingency plan has been discussed with

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Speaker 15: the president.

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Speaker 10: So my understanding I was at the FED in twenty

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Speaker 10: eleven is that this plan was never presented to the

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Speaker 10: President and never approved.

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Speaker 15: And would you present it now?

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Speaker 7: Look, we would.

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Speaker 10: We were working full time to work with Congress to

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Speaker 10: raise the debt ceiling. That's where our focus is. We

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Speaker 10: know that the only good outcome is one in which

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Speaker 10: Congress act acts, as it has many times, almost eighty

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Speaker 10: times since nineteen sixty, to.

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Speaker 7: Raise the debt ceiling.

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Speaker 10: What global markets and American households and businesses need to

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Speaker 10: see is that we have a Congress that's committed to

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Speaker 10: paying the bills that we've incurred as a consequence of

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Speaker 10: our legislation, that we're not a dead beat country. And

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Speaker 10: if Congress fails to do that, it really impairs our

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Speaker 10: credit rating. We have to default on some obligation, whether

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Speaker 10: it's treasuries or payments to Social Security recipients. That's something

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Speaker 10: America hasn't done since seventeen eighty nine, and we shouldn't

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Speaker 10: start now. So we've not discussed what to do if

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Speaker 10: that doesn't occur with the President. Our focus is on

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Speaker 10: getting it done.

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Speaker 15: Because, as you know, treasuries are the bedrock of a

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Speaker 15: global financial system, and the asset managers I speak to

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Speaker 15: the investors, they don't have the luxury of not contingency planning,

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Speaker 15: So at this point should they assume that debt may

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Speaker 15: not be serviced if there's no deal.

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Speaker 10: Look, if Congres raise the debt ceiling, we face economic

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Speaker 10: and financial catastrophe.

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Speaker 7: One way or the other.

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Speaker 10: And that's why our focus is on making sure the

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Speaker 10: Congress does raise the debt ceiling. I feel that that's

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Speaker 10: something we're going to succeed at doing, and we're working

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Speaker 10: hard to make sure that that gets done.

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Speaker 15: As we get closer to June first, will you alert

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Speaker 15: Congress on a more precise date?

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Speaker 10: Yes, I will update Congress as we have available information.

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Speaker 15: But anything new now or still June first.

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Speaker 10: Well, what I've said is early June, and potentially as

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Speaker 10: early as June one. As we get closer, I may

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Speaker 10: be able to provide more refined guidance. But you know,

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Speaker 10: there is a lot of uncertainty about the exact level

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Speaker 10: of cash balances and payments that we have to make

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Speaker 10: from day to day, and so there remains a level

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Speaker 10: of uncertainty about precisely when we would run out of

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Speaker 10: cash to be able to pay the government's bills.

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Speaker 15: Jamie Diamond was on Bloomberg TV yesterday and he said

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Speaker 15: he set up a war room for contingency planning. Are

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Speaker 15: you actively speaking to executives.

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Speaker 10: I have talked, not within the last few weeks, but earlier,

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Speaker 10: around the time in January when I sent my first letter,

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Speaker 10: I talked to a number of bank executives. More recently,

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Speaker 10: I've talked to leaders of business businesses in different sectors

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Speaker 10: of the economy, and I will be meeting with senior

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Speaker 10: bankers next week when I get back. But I want

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Speaker 10: to understand how they're thinking about the debt ceiling, and

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Speaker 10: what I'm hearing is that it is a grave source

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Speaker 10: of uncertainty. That is one of the things that businesses

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Speaker 10: are really concerned about. One of the biggest sources of

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Speaker 10: uncertainty in terms of many big American businesses.

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Speaker 7: That's where we're hearing too at Bloomberg.

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Speaker 15: How frustrated are you potentially that these bank executives are

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Speaker 15: speaking to are not putting pressure on Congress, particularly Republicans.

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Speaker 10: Well, you know, Wall Street executives and American business people

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Speaker 10: have always spoken out about their concerns about the debt sealing,

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Speaker 10: and I think it's appropriate for them to talk about

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Speaker 10: how they see the debt sealing is impacting the American

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Speaker 10: economy and the global economy. So those voices, you know,

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Speaker 10: we want to hear voices of people who will be

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Speaker 10: affected by this.

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Speaker 15: On top of all this, there's still some tremors in

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Speaker 15: the banking system. In two months almost to the date,

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Speaker 15: we've had four US lenders fail, But the administration continuously

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Speaker 15: says that the banking sector is sound and resilient. Is

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Speaker 15: that a fair assessment when you look at the regional

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Speaker 15: banking sector, Well.

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Speaker 10: The regional banks have been under some stress, but I

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Speaker 10: think the banks that have failed have had some very

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Speaker 10: unique characteristics that have made them vulnerable. The banks that

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Speaker 10: failed tended to have substantial losses marked to market losses

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Speaker 10: on their whole to maturity portfolios. So although their regulatory

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Speaker 10: capital wasn't impaired, their tangible equity was diminished. And they

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Speaker 10: simultaneously had a very high proportion of uninsured deposits. And

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Speaker 10: that profile is not very common. But look, a lot

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Speaker 10: of banks, particularly regional banks, are seeing their earnings come

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Speaker 10: under pressure. The amount that they're having to pay for

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Speaker 10: deposits is rising, and in many cases their investments are

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Speaker 10: at lower interest and their stock prices are coming under pressure.

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Speaker 10: But most banks now, even including the ones that are

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Speaker 10: seeing pressure on their stock prices, have solid liquidity, would

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Speaker 10: be able to manage paying off on insured depositors if

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Speaker 10: they were to flee.

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Speaker 15: Are you confident no other regional or small lenders will fail?

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Speaker 10: Well, look, I don't want to talk about the situations

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Speaker 10: of individual banks, but what I see is a banking

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Speaker 10: system that overall is well capitalized, still has very solid earnings,

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Speaker 10: and we've improved the available liquidity to the banking system

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Speaker 10: and think that banks are going to be able to

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Speaker 10: survive this. But you know, we're monitoring this situation very

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Speaker 10: very carefully.

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Speaker 15: The other big elephant in the room at this G

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Speaker 15: seven meeting is, of course China, and you spoke about

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Speaker 15: this yesterday, how you're working with your peers to look

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Speaker 15: out outbound investment potentially when it comes to China. This

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Speaker 15: would add on to what the United States has already

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Speaker 15: done with export controls and sanctions. And you recently gave

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Speaker 15: this speech about China and how the US views economic policy,

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Speaker 15: and what you made clear is that national security concerns

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Speaker 15: will be paramount even if it becomes to economic concerns.

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Speaker 15: So I'm curious why the US still has tariffs on

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Speaker 15: China if that is an economic benefit to many US consumers.

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Speaker 10: Well, look, you know there was a so called three

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Speaker 10: oh one action that was filed against China for unfair

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Speaker 10: trade practices, and China wis fan guilty of three oh

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Speaker 10: one violations, and those tariffs were put on place as

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Speaker 10: retaliation for unfair trade practices. The Trump administration arrived at

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Speaker 10: an agreement with China that might have led to lowering them.

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Speaker 10: China didn't carry out their part.

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Speaker 15: But are there any national security concerns about that's.

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Speaker 10: Upholster that's not a national security concern. That's unfair trade practices,

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Speaker 10: so that's not national security related. We do have concerns

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Speaker 10: with some of the practices that China has engaged in

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Speaker 10: with respect to trade and investment, whether it's forced technology transfer,

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Speaker 10: massive subsidies to industries that really distort patterns of international trade.

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Speaker 15: Yeah, and that'll be a big topic as well when

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Speaker 15: President Biden meets with the leaders in Hiroshima, but also

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Speaker 15: on China. I know that you're looking forward to potentially

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Speaker 15: going to Beijing, you said at the appropriate time. We

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Speaker 15: now have your counterpart in place, Holy Pong. He's been

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Speaker 15: there for several weeks, so are there any plans in

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Speaker 15: the works.

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Speaker 10: I expect to travel there. I can't tell you what

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Speaker 10: the date is. We have a number of senior American

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Speaker 10: officials that are likely to go. We need to sequence

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Speaker 10: them appropriately.

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Speaker 7: And will you'll be there.

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Speaker 10: I don't know who will be the first, but we're

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Speaker 10: working with the Chinese and discussing among ourselves with the.

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Speaker 15: Appropriate call yet though with Hulifong or you're just going

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Speaker 15: to wait to seem in person.

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Speaker 10: I haven't had contact yet with my new counterpart.

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Speaker 15: And if I could ask one final question, Madame Secretary,

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Speaker 15: I know you're staying on for the remainder of the

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Speaker 15: Biden administration, but President Biden also announced he's running for

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Speaker 15: twenty twenty four. Do you consider another four years at Treasury?

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Speaker 10: Well, look, I was really thrilled to be asked to serve.

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Speaker 10: I've really enjoyed the position I have. I have a

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Speaker 10: lot of work to do, and that's a topic I

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Speaker 10: have not yet given any thought to. But I would

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Speaker 10: like to stay until the end of his first term

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Speaker 10: and continue on the important agenda of work that we

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Speaker 10: have at Treasury.

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Speaker 2: And that was the Secretary of the US Department of Treasury,

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Speaker 2: Janet Yellen, speaking with Bloomberg's and Marie Hordern from the

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Speaker 2: sidelines of the G seven gathering in Japan, and Anne

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Speaker 2: Marie joins us now with more on this really great

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Speaker 2: interview with the Treasury secretary. Really cool to hear you,

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Speaker 2: Anne Marie. Try to press Janet Yellen on her future

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Speaker 2: plans as well as her potential meetings with China, but

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Speaker 2: of course the debt ceiling overrides it all, and it

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Speaker 2: still seems like she's trying to keep those other options.

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Speaker 6: Close to her vest.

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Speaker 17: Is, even when you press her about the contingency plans

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Speaker 17: that she was aware of in twenty eleven when she

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Speaker 17: was at the FED. There was this meeting that was

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Speaker 17: made public years later about what the FED new Treasury

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Speaker 17: was willing to do. She does not want to speak

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Speaker 17: about contingencies because she doesn't want some global marketplace. She

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Speaker 17: doesn't want politicians in Washington to think that it would

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Speaker 17: be okay if they defaulted. The US government would have

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Speaker 17: to make some very hard decisions on whether or not

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Speaker 17: they pay the principles the coupons on bonds maturing, or

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Speaker 17: if they were to pay bills like Social Security money

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Speaker 17: that goes out to veterans. So politically, you'll be very

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Speaker 17: fraught for them to have to make these decisions. But

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Speaker 17: what we do know is that the assumption was in

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Speaker 17: twenty eleven when we last had a massive debt sealing fight,

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Speaker 17: that they were going to prioritize the payments on the debt.

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Speaker 17: But this is something that she did say their path forward,

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Speaker 17: but they don't even want to discuss them out loud.

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Speaker 2: Yeah, we got confirmation from you as well that the

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Speaker 2: Secretary is going to be meeting with bank executives next week.

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Speaker 6: What can we expect to come out of those discussions.

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Speaker 17: Well, I think one thing is she wants to make

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Speaker 17: sure that anyone in the executive world, whether it's business

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Speaker 17: or banks, is going to put pressure on politicians. She's

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Speaker 17: probably not going to really open up what she plans

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Speaker 17: on discussing with them, but what we do know is

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Speaker 17: that bank executives are concerned. Jamie Diamond told Francine Lacroix

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Speaker 17: yesterday that they've set up a war room at JP

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Speaker 17: Morgan and right now it's maybe frequent in once a week.

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Speaker 17: That will start to go down to once a day

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Speaker 17: and then potentially three times a day. So for banks

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Speaker 17: that hold you know, billions of dollars in treasuries, the

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Speaker 17: bedrock of the global financial system, they're looking at contingency

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Speaker 17: planning and that is something I imagine they're going to

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Speaker 17: press Madam's secretary on.

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Speaker 16: This is Bloomberg Daybreak Today, your morning brief on the

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