S&P analyst: Default worse than 2008

Top Standard and Poor’s analyst John Chambers warned Wednesday that failing to raise the debt ceiling and defaulting on the debt could be worse than the 2008 economic collapse.

“It would be worse than Lehman Brothers in my judgment, and I think it’s needless,” Chambers said Wednesday on “CBS This Morning.”


Chambers would not say whether the credit rating agency would downgrade America’s rating if the debt ceiling weren’t raised, but he said the fact that there’s even doubt is why the United States doesn’t have the highest rating already.

“We’ll have to see what the government’s response is. Our assumption is that there will be a plan, that’s why we rated AA+ with a stable outlook. However the mere fact that we’re having these discussions led us to conclude two years ago that it simply wasn’t appropriate to have a AAA rating on the U.S. government,” Chambers said.

( WATCH: 10 great quotes on debt ceiling fight)

Chambers, a sovereign analyst on the U.S. credit rating and chairman of the Sovereign Rating Committee for Standard and Poor’s, predicted Congress will pass a deal, but he said President Barack Obama has options to avoid a default if they fail to raise the debt ceiling on time — even if it risks his impeachment.

“One option he could have, which is a dangerous option but maybe the one that would the most palatable, is to invoke the 14th Amendment and just issue debt in defiance of Congress,” Chambers said. “If worse comes to worse, I think he can invoke the 14th Amendment and suffer the consequences of Congress’s actions, which would entail trying to impeach him.”

The amendment states: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

The White House has repeatedly rejected using the 14th Amendment as an option.

CORRECTION: An earlier version of this article misstated John Chambers's title. He is an analyst for Standard and Poor's.

CORRECTION: Corrected by: Bridget Mulcahy @ 10/16/2013 11:16 AM CORRECTION: An earlier version of this article misstated John Chambers's title. He is an analyst for Standard and Poor's.