NEW YORK ( TheStreet) -- The Standard & Poor's downgrade earlier this week of U.S. sovereign debt sent shock waves through the financial world.
Against this backdrop of ongoing budget and deficit battles in Washington, which likely will continue until the next presidential election in 2012,
asked First Niagara CEO John Koelmel how he sees the issue playing out.
When do you expect interest rates to rise and what impact do you see on your business?
First Niagara Financial Group
(FNFG - Get Report)
CEO John Koelmel: "It will be a while before rates rise," said the chief of the Buffalo, N.Y.-based retail banking outfit. "They only have one way to go, and that is up. It is not a question of if, but when. I continue to believe that until the economic recovery, narrowly and broadly defined, is much more stable than it is to date -- rising rates on top of rising gas prices and uncertainties in the regulatory arena would compound the problem, not be part of the solution. It will be a while before we see some rise in rates."
S&P downgraded its outlook for U.S. sovereign debt to negative. How do you think the deficit and economy will affect the banking business?
|First Niagara CEO John Koelmel
"This is just one more level of uncertainty. That is a major deterrent to the economic recovery. The private sector makes it clear that there is a hesitancy and a pause to re-engage and reinvest. When you look at the collective economic uncertainty in the political environment, who is going to do what next?
"What does it mean to us and the private sector? People want more specificity and need more clarity. The free market system is used to taking some risk, but at this point it continues to be too much of a moving target, and the uncertainties are getting in the way of stimulating a sustainable economic recovery.
"It is important that there is better definition and much less partisan politics, that the common sector coalesces around a common objective and the necessary objective, and we get there sooner rather than later. Although none of us expect sooner to be any time too soon."
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