Twin Cities financiers confident of debt ceiling deal soon

Democrats and Republicans appear locked in a standoff with seemingly little prospect for compromise over dueling plans for raising the federal debt ceiling so that government can continue operations.

But Twin Cities investors and bankers say they are confident a deal will be brokered, and their customers don't seem worried about their investments.

"Potentially, this could be a disruptive event," said William Frels, CEO and chairman of the Mairs & Power investment firm in St. Paul. "But we believe the odds strongly suggest that there will be some kind of settlement."

With just a little more than a week before the Aug. 2 deadline to reach an agreement regarding the $14.3 trillion U.S. debt ceiling, President Barack Obama's Democrats and their Republican rivals are pursuing separate budget proposals, with no clear path to bring them together.

In a televised address, Obama spoke to the nation last night to assail a newly minted Republican plan to raise the nation's debt limit as an invitation to another crisis in six months' time.

House Speaker John Boehner responded in a separate address that gave no indication of compromise and accused the president of wanting a blank check from Congress to raise the debt ceiling.

Frels says investors in his funds are taking the long view. "People are interested obviously," he said. "But there's no panic."

"I would say if people are concerned, they're not taking to us about it," said Bremer Bank spokeswoman Teresa Morrow. The bank is assessing the potential problems it could encounter, such as with small business loans, if the federal government does not raise its debt ceiling to pay bills.

"We are concerned it could have an impact to federal programs that our clients utilize and programs and services that we help get into the hands of those clients," Morrow said. "There's obviously a concern there. I think we're focusing on what we can help our clients with and try to meet those needs today."

Other firms also have contingency plans for if there's no deal.

"There's been a very limited amount of concern voiced by our members at this point," said Brett Weinberg, spokesman for Thrivent Financial. "It is certainly something that we're paying close attention to, though. And we do have existing market fluctuation plans that are already in place that we can activate if necessary."

Managers at Wells Fargo are confident legislators will reach a resolution, have developed contingency plans to meet customer needs should a debt agreement not be reached.

"The consequences of a failure to reach an agreement are unknown, and therefore it is imperative that the President and Congress work together to reach a resolution in the best interest of the nation," a company statement said.

At US Bank, part of its risk evaluation process is to prepare for different scenarios, said a spokesman, and they are not seeing any significant rise in customer concern about the federal debt issue.

However, the impasse has rattled investors worldwide, sending stocks and the dollar down and pushing gold up. But the reaction has been far short of a panicky sell-off.

On Wall Street there is belief that political leaders in Washington will conclude they must find a way to avoid having the federal government default on financial obligations.

"I don't want to take great comfort in it but the markets -- whether it's a betting machine or a polling machine -- assess that they will come to an agreement and not default," said Chris Sebald, chief investment officer for Advantus Capital Management of St. Paul.

He expects a resolution will come soon.

---- This report contains material from the Associated Press and Reuters.