Yellen Tells Bank CEOs Debt-Limit Failure Would Be Catastrophic

Viktoria Dendrinou, Bloomberg News

WASHINGTON, DC - JULY 28: Treasury Secretary Janet Yellen delivers remarks during a press conference at the Treasury Department on July 28, 2022 in Washington, DC. Secretary Yellen discussed the state of the U.S. economy highlighting America's economic recovery coming out of the COVID-19 pandemic while discussing the steps policymakers are implementing to curb record high inflation and economic slowdown. (Photo by Win McNamee/Getty Images) , Photographer: Win McNamee/Getty Images

(Bloomberg) -- US Treasury Secretary Janet Yellen told top bank executives Thursday that a failure to raise the debt ceiling would be “catastrophic” for the financial system, reiterating that the matter should be addressed without delay.

Yellen “discussed the urgent need for Congress to address the debt limit and underscored the real and severe consequences of default for the banking system and the domestic and global economy,” the Treasury said in a statement following Yellen’s meeting with more than two dozen chief executive officers and other executives convened by the Bank Policy Institute.

The session was scheduled to include JPMorgan Chase & Co.’s Jamie Dimon, Citigroup Inc.’s Jane Fraser and Bank of America Corp.’s Brian Moynihan. On Wednesday, top bankers met with Senate Majority Leader Chuck Schumer and other lawmakers, in the midst of intensifying talks on addressing the debt limit.

Read More: Here’s the Emerging Debt-Limit Deal as Talks Go Down to The Wire

During Thursday’s meeting, Yellen also discussed recent financial sector troubles and the action taken by regulators following the failures of several regional banks over the past two months.

Yellen reaffirmed the strength and soundness of the US financial system and “made clear” that the Treasury continues to closely monitor conditions across the banking sector, the Treasury said.

--With assistance from Jenny Surane and Katherine Doherty.