WASHINGTON (Sputnik) – On Monday, White House Press Secretary Josh Earnest told reporters that the US government is considering contingencies in the event that the British vote in favor of leaving the EU. UK nationals are set to vote in a referendum on the country's EU membership on Thursday, June 23.
"The biggest contingency they [US government officials] should consider is the fact that such a vote could set off the kind of financial panic we saw with the failure of Lehman [Brothers] in 2008," Harvard Law School Professor Hal Scott told Sputnik on Wednesday.
Lehman Brothers was one of the first US banks to fall during the 2008 financial crisis. The crisis led to stricter US financial regulations like the Dodd-Frank Act, which supporters said would improve transparency.
"The problem is that the weapons we [the United States] would need to respond [to Brexit]… have been diminished, and in some cases taken away, by the Dodd-Frank Act," Scott noted.
The US Federal Reserve, Scott argued, can no longer operate independently in case of a financial crisis given that everything it does must now be approved by the US Secretary of the Treasury.
"The Fed didn’t lend directly to the funds because they couldn’t, but they lent to the banks to lend to the funds."
Unfortunately, in the aftermath of the crisis such lending was characterized as "bailing out Wall Street," Scott added.
"When the White House and Treasury [Department] get together and talk about what they are going to do [about Brexit] they have to take into account those powers have been restricted."
University of British Columbia Sauder School of Business Professor Maurice Levi told Sputnik that Brexit is unlikely.
"Even if Britain votes to leave the EU – which I don't think will happen – this will be followed by discussion of new and possibly better terms of membership."
For example, Levi added, Britain after exiting the union might agree with the remaining EU members on trade agreements.
On Wednesday, a member of the European parliament told Sputnik that a high turnout is expected for the referendum because Britons realize how important it is.
According to a new Opinium Research poll, 45 percent of UK citizens said they would vote for Brexit while 44 percent would vote to remain in the EU.
Brexit supporters argue that EU membership has eroded the country’s independence to legislate, direct its economy and control its borders. Opponents warn that leaving the European Union could deeply harm the British economy.