Key Takeaways:
- Bank of America CEO Brian Moynihan has stated that the bank is preparing for a potential US default on its debt
- The US government has surpassed its borrowing limit and Treasury Secretary Janet Yellen has been using “extraordinary measures” to pay its bills
- Lawmakers are divided on whether to raise the debt ceiling, with Republicans pushing for spending cuts and Democrats advocating for a quick raise
- Moynihan emphasizes the importance of lawmakers having a strong discussion on the national debt and the need to prepare for a potential default
The US Debt Crisis: Is Default Inevitable?
Bank of America CEO Brian Moynihan has stated that the firm is preparing for a potential US default on its debt. The US government surpassed its borrowing limit in January, and Treasury Secretary Janet Yellen has been using “extraordinary measures” to pay its bills. This fix is expected to last until sometime this summer.
Debate Among Lawmakers
Lawmakers are divided on the issue of the debt ceiling, with Republicans pushing for spending cuts before a deal to raise the limit is struck, while Democrats are advocating for a quick raise. Treasury Secretary Janet Yellen has stated that “every responsible member of Congress” should agree to raise the debt ceiling to avoid the “catastrophe” of a default.
Moynihan emphasized the importance of lawmakers having a strong discussion on the national debt and the need to prepare for a potential default, even if it may not occur. He noted that the bank is preparing for the possibility of a default “as it would in a natural disaster.”
The CEO of the second-largest bank in the US stated that while there is value in lawmakers debating across the aisle, it is important to remember that “hope is not a strategy.”
Preparing for the Worst
The US government has already surpassed its borrowing limit and if lawmakers do not take action to raise the debt ceiling, the country could default for the first time in its history. Treasury Secretary Janet Yellen has stated that she is “nervous” that a default could put the US economy in a tailspin and cause financial crisis.
Bank of America CEO Brian Moynihan believes that it is crucial for the bank to prepare for the worst-case scenario.