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Members of Congress are trying mightily to prevent what many experts say will be another crisis if the nation's debt ceiling isn't raised. And top executives at major companies are leaning heavily on them to strike a deal.

As NPR's Chris Arnold reports, the economic stakes are high, especially for the housing market.

CHRIS ARNOLD: Right now, interest rates are low, and that means that the government can borrow money cheaply to finance its huge debt load. Likewise, many homebuyers can get low mortgage rates, and that's been a rare bright spot for the beaten down housing market.

Mr. PATRICK FORTIN (Century 21 Commonwealth): Rates are unbelievable. I think its one thing that's kept the market really from being in much worse shape.

ARNOLD: Patrick Fortin runs Century 21 Commonwealth. It has 500 real estate agents and 18 offices around Boston. He's walking out the back door of a house that's for sale in the town of Winchester.

A really nice yard.

Mr. FORTIN: Yeah. And you could have a swing set and still have room for a patio barbecue.

ARNOLD: Hockey rink. Now everyone in Boston is building hockey rinks...

(Soundbite of laughter)

ARNOLD: ...so that's going to be the craze with the Bruins.

Fortin has been watching the ongoing political fight over the debt ceiling, and he thinks it's hurting the housing market and other industries already because he thinks lawmakers are making Americans nervous about the economy.

Mr. FORTIN: I'd like to see them get it done and work it out and move on. You know, that whether you're selling cars or hamburgers or houses, when people are concerned that we could have, you know, major economic issues, it impacts everything. Buyers don't want to buy if they think there's bigger issues out there.

ARNOLD: Many economists agree that consumer confidence is taking a hit from all this. Their other big concern is that investors have been starting to get nervous too. And it's possible that that could end up driving interest rates higher, which would not be good at all for Fortin's mortgage business.

Mr. FORTIN: Oh, there's no question. You know, any sort of bump is an impact; a substantive bump would be dramatic.

ARNOLD: OK. So here's how this would work. If the debt ceiling isn't raised, the U.S. Treasury could default on its debts. Treasury says it would run out of the money that it needs to make payments on some of its treasury bonds.

Mr. SCOTT SIMON (Head, Mortgage And Asset-Backed Securities Teams, PIMCO): Treasuries are essentially the holy of all holy credits.

ARNOLD: Scott Simon is one of the top bond investors at PIMCO, which manages more than a trillion dollars on behalf of pension funds and other customers. He says financial markets are based on trust. And investors around the world have tremendous faith in U.S. Treasury bonds. So...

Mr. SIMON: If the U.S. defaults or appears like it's going to default intentionally, I think that puts huge questions into the credibility, the sanctity, the holiness of U.S. treasuries.

ARNOLD: And that means that investors could demand higher interest rates to loan the U.S. government money, but it could also drive up interest rates for all kinds of other things, including home loans.

Simon explains that U.S. lawmakers even just flirting with defaults, as they've been doing, that's already raising some scary questions in the investing world. If treasuries might not be sacred, well, then what about home loans that are guaranteed by the government-backed mortgage firms Fannie Mae and Freddie Mac? Those are probably less sacred. And what if the U.S. someday doesn't honor those guarantees?

Mr. SIMON: There is a worry, and you see it in the patterns of international investors that they've started to shy away from Fannie and Freddie mortgages in spite of the explicit support of the government.

ARNOLD: If more investors lose faith, Simon believes that that would push interest rates way up and severely restrict millions of Americans' ability to qualify for loans.

Mr. SIMON: We think housing is fragile, very, very easy to break and very, very difficult to fix it if you break it. And, you know, I think my biggest personal fear is that the Congress, in trying to get a good headline, accidentally breaks the housing market, and you want to avoid that desperately.

ARNOLD: Simon thinks another crash in housing could bring the whole banking system down with it. An actual default on treasury bonds could be even worse. And this is why many top business people are putting pressure on politicians to basically stop the madness and raise the debt ceiling. Many think lawmakers are playing a dangerous game that could push up interest rates. And if that happens...

Mr. RICHARD SMITH (CEO, Realogy Corporation): It's going to have a staggering impact on the economy.

ARNOLD: Richard Smith is the CEO of Realogy Corporation, which owns Century 21 and Coldwell Banker and other firms. He says he's on the phone every day to his lobbyists in Washington who are pushing lawmakers to reach a deal. He says many other CEOs are doing the same.

Mr. SMITH: Running up to the very last minute is just completely irresponsible on the part of the government. To take the entire business community to the edge, what do you think is going to happen? Nothing. People are not investing. They're not making major business decisions. They're not hiring. They're holding their cards.

ARNOLD: So investors and CEOs are hoping Congress pushes a deal through quickly.

Chris Arnold, NPR News, Boston.

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