Wall Street Warns of Unthinkable Consequences of Default

A group of 17 current and former leaders of the US Treasury Department’s Borrowing Advisory Committee have sounded the alarm to Finance Minister Janet Yellen, warning that prolonged congressional negotiations and the lack of agreement on the debt ceiling will come at a high cost for everyone. Bloomberg reports that they argue that the long-term consequences of default are simply unthinkable.

Among the expert group are top officials from Goldman Sachs, including Beth Hammack and Ashok Varadhan, as well as former JPMorgan Chase & Co Chief Operating Officer Matt Zames. They argue that the scale of the consequences of prolonged negotiations or default cannot be quantified, and urge for the debt limit to be raised as soon as possible.

“It’s time to introduce an alternative approach to ensure fiscal responsibility – either by raising the limit alongside budget allocations, or by completely eliminating the debt ceiling”, they wrote.

It’s worth noting that the President himself, Joe Biden, is taking direct action to address this issue. In fact, just this Tuesday, he sat down with Speaker of the House Kevin McCarthy and other Congressional leaders to brainstorm solutions and avoid a potential debt ceiling crisis. This is a high-stakes game of political chess, and all eyes are on the White House to see what move they’ll make next.