The following is the transcript of an interview with National Economic Council director Lael Brainard that aired on "Face the Nation" on May 14, 2023.

MARGARET BRENNAN: We turn now to the economy, and the new chairman of the National Economic Council Lael Brainard. She was most recently the number two at the Federal Reserve. Welcome to Face The Nation. Good morning to you. 

LAEL BRAINARD: Good morning. 

MARGARET BRENNAN: Happy Mother's Day.

BRAINARD: Happy Mother's to you- Day to you too, Margaret.

MARGARET BRENNAN: You have certainly been busy in this new job. I want to ask you about where we are with the state of negotiations over the debt ceiling. The President has said talks are moving along, the Secretary of the Treasury said negotiators have found some areas of agreement. That sounds like movement, how close are we to a deal?

BRAINARD: Yeah, so the staff is very engaged. I would characterize the engagement as serious, as constructive. And, you know, I think it is, though Margaret, helpful to just lift up and talk a little bit about what is at stake here. So when I talk to CEOs, to business leaders around the country, they tell me things are actually going very well. But their biggest concern is that Congress might fail to prevent default, and that that would be catastrophic. It would lead to higher borrowing costs for cars, for mortgages, for small businesses, even for the U.S. government. And so the most important thing is making sure that Congress fulfills its basic responsibility to avert default.

MARGARET BRENNAN: You said talks were constructive. I know, Leader McConnell said the U.S. is not going to default. And the President, when he spoke, he said there was substantial movement in the sense that most everyone agreed that the- defaulting the debt is off the table. So you're saying it's not necessarily off the table?

BRAINARD: So default is something that Congress knows how to avoid. Congress has acted--

MARGARET BRENNAN: It's still very much a risk?

BRAINARD: Congress has acted 78 times in a row to avert default, to prevent default, and we know they have done it. They certainly did it three times under the last administration. So our expectation is that Congress will do what is necessary, even as we continue to have parallel discussions on the budget, which is a normal thing that Congress needs to do every year. 

MARGARET BRENNAN: And that's what you're talking about now the--

BRAINARD: Absolutely. 

MARGARET BRENNAN: So the President was asked if the only option was the short-term lift of the debt ceiling, and he said he still thought there was time for a whole deal. Is that what you're saying? It's budget and debt ceiling, and this can get done before June 1st?

BRAINARD: You know, short-term is not a fix, is not really addressing that core uncertainty that CEOs are talking about. It's just really important to take default, and address it and Congress has the tools to do that. They've done it, again, 78 times previously. Meanwhile, we also are at the staff level, seeing productive discussions around the budget, separately, but in parallel, and those discussions are also important. And of course, that's something that Congress wrestles with every year, and so our hope is that those conversations also continue and- and arrive at a constructive place

MARGARET BRENNAN: So that the goal is still whole deal by June 1st.

BRAINARD: So right now, the focus is on the budget and those discussions, but our expectation is that Congress will act to avert default in a timely manner.

MARGARET BRENNAN: So you were just talking about your conversations with business leaders. I mean, it seems like we're in this like game of chicken here. JPMorgan Chase's CEO, Jamie Dimon said that he set up a war room for contingency planning. They meet once a week, and he's gonna have them start meeting multiple times potentially starting next Sunday. So he's planning for potentially the worst. Was it a mistake to let things get to this point, where you have the head of the largest bank of America in America having to do this should the White House have started negotiating earlier?

BRAINARD: So this is really a responsibility of Congress. Let's just step back again. The U.S. always pays its bills. The discussions over the debt ceiling, Congress's basic obligation is really just about paying the bills. Congress has already passed laws to authorize. And so the conversations that are ongoing right now really very much focused on the budget, which is the future of the fiscal commitments that the U.S. can make, but in terms of the responsibility to pay our bills, America isn't a deadbeat nation. We do pay our bills. Congress has always acted and they know how to do it and they have the capacity to do it in a timely manner. 

MARGARET BRENNAN: Sure, but the bottom line is you have to get to a deal by a hard date on the calendar. So more time, I think would have been helpful, no?

BRAINARD: So, you know, again, that is Congress's basic responsibility. I think there is a very clear record here, where the American people want the U.S. to pay its bills. And I'm sure Congress will see its way clear to making sure that happens.

MARGARET BRENNAN: I'm going to ask you about banks in America. The Fed is the main regulator for many American banks. That's where you were before you came to the White House. You said the banking system is sound back in April, but since that time was another bank failure, we're still seeing pressure. Why- why still if it's actually sound?

BRAINARD: So it's important to remember, Margaret, that our banking system has nearly 5,000 banks, banks of all sizes, small community banks, in small communities all over the countries to the largest banks, the money center banks. And so you know, back in March, we did see the failure of three banks that are of mid-size banks. And those were dealt with in a way where depositors never had any question, but that they would have access to their deposits. So in that sense, Americans have confidence. The banking regulators took strong actions, we have the tools, and they can be used again--

MARGARET BRENNAN: But doesn't that-- 

BRAINARD: More oddly though, the banking system is sound, although we are monitoring very carefully.

MARGARET BRENNAN: But doesn't the fact that we still see pressure here show the government's sort of ad hoc decision making on- on backstopping depositors hasn't solved the problem?

BRAINARD: So look, the environment has changed a lot over the last few years with interest rates going up by a large amount and banks, several banks that have now failed and been taken over by healthier banks didn't manage their risks. Those were isolated problems. But of course, we're all monitoring the situation very carefully. But we have the tools, we've taken strong actions. I think people know what the playbook is, so in that sense--

MARGARET BRENNAN: So no more failures? 

BRAINARD: Well, in that sense, the system overall is sound. I can't speak to particular institutions, obviously that sits with the bank regulators. But overall, you've seen that the banking system is sound and- and deserves continued vigilance. 

MARGARET BRENNAN: All right, Lael Brainard. Thanks for joining us today. 

BRAINARD: Thank you.

MARGARET BRENNAN: We'll be back in a moment.