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Former Goldman Sachs VP in Congress Talks About the Debt Ceiling

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Moody's warning that the United States may lose its AAA credit rating is the latest chapter in the crazy train ride known as the debt ceiling.

While stocks got a one two punch to the gut after the announcement, Congress didn't skip a beat and ended yet another round with no agreement. No side wants to throw in the towel yet. But while both parties want to hold the belt over their head in victory, what price are they willing to pay?

Uncle Sam's credit rating is on the line and he's hanging on the ropes for dear life. Many of my contacts are telling me this is not the right time to be playing partisan politics. I caught up with one of the members in Congress who has worked outside of the Beltway on Wall Street. I'm talking about Rep. Jim Himes (D-CT).

Prior to sitting on the Financial Service Committee, Himes worked for 12 years at Goldman Sachs, where he worked his way up to Vice President. I got right to the point asking him if he's disappointed about this political bickering and what he is trying to tell his colleagues about the impact of their inaction.

LL: You worked on wall street. Are you disappointed with what is going on in Congress? What kind of message does this debt ceiling battle send to the markets?

Rep. Himes: I have said for quite sometime, doing any other thing than raising the debt ceiling in a clean fashion runs of the risk of devastating economic consequences. And we are seeing that now.

There comes a point whether its two or five or ten days from now where the expectations for an increase in the debt ceiling changes from yes to no and that's when we start to see interest rates go up and markets react. I was in the room when Ben Bernanke testified before the House Financial Services Committee where he said that the consequences would be severe on our economy. And so, I have been saying forever we should get past this debt ceiling vote and continue the hard work of putting together a serious fiscal reform package.

LL: Both sides are waiting for each other to blink but how much more will the markets bear? Do they wait until Treasury defaults on a bill?

Rep. Himes: That better not happen. One thing I am concerned about is that a lot of people in Congress are thinking about this as government shut down. Saying, "oops we're going to need to shut down the national parks tomorrow." That's something of which they have total control over. The confidence of the markets however, Congress has zero control over. I think it is a very dangerous dynamic. You can open a national park tomorrow but you can't regain the confidence of the markets over night.

LL: You worked on Wall Street, you represent the Greenwich areas where many hedge funds call home. What are your constituents worried about? What are they telling you?

Rep. Himes: I think my constituents in particular and mind you while I do have a lot of financial services it is a diverse group. But the financial services industry in my district doe recognize what is going on with the debt ceiling and they know its extremely risky. Like everyone else they want a robust discussion and action on our fiscal situation but to be using this debt ceiling as a negotiating tool is very,very, dangerous.

LL: Roger Altman told me Congress can't play political games with the full faith and credit of the United States. How are you trying to educate your colleagues in Congress who don't have your market background on this message coming from Wall Street?

Rep. Himes: I have been on the floor everyday this week talking about this issue. I have been talking to the media. I think there are members of Congress who know that I have an above average feel for the capital markets in the Congress so I am trying to be more evangelical on this message that we do need to do the right thing about of fiscal reform but playing around with the debt ceiling is a terribly dangerous thing.

LL: We hear the words time and time again that this would be a "costly" mistake. Not that you can quantify the impact with a number per say, when you tell someone it will be costly. How can someone wrap their arms around this possible impact without a number for them to identify with?

Rep. Himes: We have never seen this before. The debt ceiling has been raised dozens of times without incident. Its a little hard to predict something that has never happened before. But I will tell you one thing the Chairman of Federal Reserve said Wednesday before the House Financial Services Committee that failure to raise the debt ceiling will cause huge numbers of jobs losses and every other word out of the mouths of my party is jobs. So, listen to the Chairman of the Federal Reserve.

LL: What has you really concerned with this whole debt ceiling battle?

Rep. Himes: I am particularly outraged by some of the discussions of whether it is possible to manage a default. There's lots of discussion with Rep. Michelle Bachmann (R-MN) and others that "gosh we might be able to pay our soldiers or social security." I never thought I would live to see the day when we were be discussing how the United States could be a dead beat.

LL: It's pretty scary isn't it.

Rep. Himes: Yes it is.

A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."

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