WASHINGTON — The U.S. government has hit its limit on how much money it can borrow, and the Treasury Department is deploying "extraordinary measures" to avoid a default.
In a
"The period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting the payments and receipts of the U.S. government months into the future," Yellen said in the letter. "I respectfully urge Congress to act promptly to protect the full faith and credit of the United States."
The brinkmanship on the debt limit is expected to reach new heights this Congress. Republicans, with control of the House, adopted new rules to elect McCarthy as speaker to appease the party's most conservative faction. The rules will make it more difficult to raise the debt limit, and embolden Republicans' ability to demand that any increase comes alongside spending cuts.
Should a standoff continue, the United States would need to eventually borrow more money to pay its bills, or stop making good on its financial obligations, which could include a default on its debt.
The big fear for banks is that debt ceiling brinkmanship, and the accompanying fallout, would disrupt the Treasury market, which underpins the entire financial system.
It's up to the Treasury to decide how to prioritize payments in the event of continued uncertainty in Congress about the debt ceiling. In a
