Barack Obama: US won't default

26 July 2011

Barack Obama has been speaking to the top executives at major banks in the US to assure them that the country will not default on its debt.

Fox Business reports that while officials from the US government have spoken of the possibility of such a move, the president has been secretly informing lenders this will not be the case.

Obama rang the institutions to inform them that even if the debt cap is not raised by 2 August 2011 - a date cited by Treasury secretary Tim Geithner as when the government will not have enough money to settle its bills - a default will not be permitted.

A senior banking official told the news provider 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".

The news comes as reports from Wells Fargo, Barclays and UBS suggest the US Treasury has more spare cash than it is revealing, as daily tax receipts have been higher than anticipated, the Washington Post reports.

By Tony Aynsley

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