(Bloomberg) — For the past seven months, an arcane financial-markets proposal has been collecting dust in the statehouse halls of Albany, New York. Between the pandemic and the racial-justice protests, lawmakers have been so preoccupied that no one in either chamber has even initiated the legislative process on it.
But to bankers, investors and regulators, this is no run-of-the-mill document. It’s a proposal that’s crucial to ensuring that a huge swathe of the global financial system, involving deals worth potentially trillions of dollars, doesn’t turn into a chaotic, lawsuit-riddled mess when the London interbank offered rate is officially discontinued at the end of next year.
And while that still leaves 15 months to hammer out a solution, Albany is not expected back in session until January, and anxiety is already mounting among those on Wall Street who had originally expected the proposal to sail through the legislative process
- Wall Street is finally accepting diminished chances for a near-term stimulus deal, and firms’ latest GDP forecasts reflect growing pessimism toward the economy’s chances without fresh aid.
- Goldman Sachs halved its GDP growth forecast to 3% on Wednesday. JPMorgan followed suit one day after, cutting its estimate to 2.5% from 3.5%.
- Morgan Stanley and Bank of America trimmed their expectations earlier in the month. All four of the Wall Street giants cited an absence of new fiscal relief for their gloomier outlooks.
- Still, some hope for a spending package emerged Thursday. Treasury Secretary Steven Mnuchin said new stimulus is “still needed,” and top Democrats rolled out a new $2.4 trillion proposal that could be voted on as early as next week.
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With the US economic recovery slowing and stimulus still stuck in a legislative deadlock, Wall Street is