WASHINGTON, Oct 18 (Reuters) - Top finance executives on Thursday urged the Obama administration and Congress to stop automatic fiscal austerity measures from kicking in at year-end but did not propose fresh ideas for replacing those harsh budget and tax measures.
"The consequences of inaction ... would be grave," members of the Financial Services Forum, an industry trade association, wrote to President Barack Obama and members of Congress in a letter released on Thursday.
The letter was signed by 15 top executives of some of largest U.S. and global financial services companies, including Bank of America, JPMorgan Chase, and Goldman Sachs.
If the White House and Congress fail to prevent them, $1.2 trillion in across-the-board spending cuts would start to take effect Jan. 2 and tax cuts enacted under former President George W. Bush would expire on Dec. 31.
Lawmakers set up the year-end deadline as a spur to achieve a broader deficit reduction package but failed to reach such a deal. As the end of the year has drawn nearer, independent policymakers such as Federal Reserve Chairman Ben Bernanke have warned that failure to avert the so-called "fiscal cliff" would sharply contract economic growth in an already fragile recovery.
With a presidential election leaving the political landscape uncertain, no action is expected until after the ballots have been counted on Nov. 6.
That lack of action in light of the looming threat is causing anxiety in the business community.
Last month, chief executives of some of the largest U.S. companies also urged Congress to step up efforts to avert the fiscal cliff.
In mid-November, Congress is scheduled to begin a post-election legislative session that will consider whether to extend all or most of the Bush-era income tax cuts, as well as several other expiring tax measures. It also will weigh whether to replace the across-the-board spending cuts with more targeted reductions that might be less detrimental to economic growth.
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Trading Loss 'Puts Egg On Our Face'
Dimon said JPMorgan Chase's unexpected $2 billion loss on credit trades in May "<a href="http://www.huffingtonpost.com/2012/05/10/jpmorgan-chase-london-whale_n_1507662.html?ref=business" target="_hplink">puts egg on our face, and we deserve any criticism we get</a>."
Regulation 'The Nail In Our Coffin'
In March 2011, Dimon expressed his fear over new regulations, warning that higher capital requirements would be "pretty much the nail in our coffin for big American banks," according to the <a href="http://www.ft.com/intl/cms/s/0/3157bcbe-5b05-11e0-a290-00144feab49a.html?ftcamp=rss#axzz1IB5kVGLG" target="_hplink">Financial Times</a>.
Warning that limiting proprietary trading would also affect market making, <a href="http://www.cnbc.com/id/45986077/Jamie_Dimon_Regulators_Undermining_Economic_Objectives" target="_hplink">Dimon was quoted by CNBC</a>, "The United States has...the most liquid [capital markets in the world]. If you lose liquidity because you lose market making, you cost investors money."
'Little To Do With Financial Crisis'
"Proprietary trading had very little to do with the financial crisis," <a href="http://www.gurufocus.com/news/159099/interview--jpmorgan-ceo-jamie-dimon-on-regulation-volcker-rule-some-of-the-global-regulations-are-unamerican)" target="_hplink">Dimon told FOX Business Network Senior Correspondent Charlie Gasparino</a> in January, adding that "you can't even make markets for your clients" with the Volcker Rule.
Volcker 'Doesn't Understand'
"Paul Volcker by his own admission has said he doesn't understand capital markets," <a href="http://dealbook.nytimes.com/2012/04/06/what-volcker-rule-could-mean-for-jpmorgans-big-trades" target="_hplink">Dimon told FOX Business.</a> "He has proven that to me."
Volcker Rule Too Narrow
in February, Dimon asserted the Volcker Rule had been written too narrowly. "If you want to be trading, you have to have a lawyer and a psychiatrist sitting next to you determining what was your intent every time you did something," he was quoted as saying in <a href="http://news.businessweek.com/article.asp?documentKey=1377-aIjS6U8zr2Z8-1PEFKF7I5P2SI88Q43D587IV8L" target="_hplink">Businessweek</a>.