Wall Street urges action on fiscal cliff

The heads of the nation's largest financial institutions warned policymakers Thursday that they risk "very grave" consequences if they fail to address the fiscal cliff soon.

The Financial Services Forum, an industry group that represents the CEOs of the nation's largest banks and financial companies, sent a letter to President Obama and Congress Thursday. In it, the executives did not mince words, telling policymakers that they need to craft an agreement to avert the fiscal cliff as soon as possible, lest they risk derailing the economy, both here and abroad.

"The consequences for inaction — for stability in global financial markets — for economic growth, for millions of Americans still without work, and for the financial circumstances of American businesses and households — would be very grave," they wrote.

"The still-fragile U.S. economy cannot sustain — and the American people do not deserve — the impact of more gridlock in Washington."

The group warned that if no deal emerges on the fiscal cliff — the combination of expiring tax cuts and automatic spending cuts set to take effect at the beginning of the year — the U.S. could face another downgrade to its credit rating, and its economy could be pushed back into another recession.

The group called on Washington to strike a deal as soon as possible to avert the cliff. But at the same time, they said that avoiding it is not enough — policymakers also need to craft a credible deal that addresses the nation's fiscal challenges. If Washington merely kicks the can down the road on the cliff and does not come up with a way to bring down the nation's debt and deficits, it risks losing its "moral authority as a global leader," the group warned.

However, it steered clear of making any specific recommendations on what such a compromise should look like, as the two parties are entrenched over how to handle tax rates and spending cuts.

---