Debt ceiling deadline looms: We look at the possible ramifications of a default on US debt and how Wall Street banks are preparing.
Catch up quick:
The worst-case scenario: Despite its limited progress on negotiations at this writing, the US government isn’t expected to default on debt. But if the unthinkable happens, the consequences for the banking sector and the economy would be far-reaching.
What are banks doing?
Our take: Given the economic damage a default could cause, the US is likely to find a resolution before hitting its debt ceiling. But if it doesn’t, most banks are far better prepared for financial turmoil than in 2008, as shown by their relative stability this year despite the collapses of some regional lenders. And crisis planning now for a default seems wise, given the unpredictability of the US banking sector this year.
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