Alarm on Wall Street Grows as 'Fiscal Cliff' Nears

The sluggish U.S. economy has been relatively kind to Wall Street’s banks, many of which are flush with profits and stand to gain from the Federal Reserve’s new bond-buying effort.

Photo: Larry Grant | Getty Images

Yet these same financial titans are warning that the government’s inaction in the face of the approaching "fiscal cliff" poses real risks to an economy already saddled by stunted growth and a burgeoning debt load. 

Many Wall Street banks hold interest-rate sensitive products on their books, and stand to lose big if a debt crisis sends safe-haven Treasury yields spiking. 

Thus far, investors have been most preoccupied by the unfolding financial catastrophe in Europe, where debate rages about whether Spain will finally throw in the towel and accept an international bailout. 

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