Reuters reports:

A debt default would have a catastrophic effect on the nation’s financial system and also deal a huge setback to New York City, Mayor Michael Bloomberg said on Tuesday.

Bloomberg, mentioned among possible successors to Treasury Secretary Timothy Geithner, said the federal government must avoid damaging the nation’s economy and its credibility around the world with a first-ever U.S. default.

“America’s good name and credit are just too important to be held hostage to Washington gridlock, and I hope that in the end cooler heads will prevail and an agreement will be reached quickly,” Bloomberg, a political independent, said in a statement.