In a conversation with CNN, Bank of America CEO Brian Moynihan says the company is preparing for possible US sovereign debt default. The financial institution is the second largest bank in the country and is reportedly preparing for the worst regarding Congressional conflict over the nation’s debt ceiling.
Moynihan spoke about the Congressional debate, and specifically how that impacts corporate America. Subsequently, defaulting on the country’s debt remains a very real possibility that entities, like Bank of America, cannot disregard.
In the first few months of the new year, the National debt has reached unprecedented levels. Thus, that development has led to debates on both sides of the political aisle on whether or not the national debt ceiling should be increased before the summer months.
“We have to be prepared for that, not only in this country but in other countries around the world,” Moynihan told CNN. Additionally stating, “You hope it doesn’t happen, but hope is not a strategy - so you prepare for it.”
There is some expectation that President Joe Biden could address the debt ceiling debate during Tuesday’s State of the Union Address. Conversely, US Treasury Secretary Janet Yellen has already expressed a warning over the nation’s debt crisis. Noting the possible default as soon as June, if the ceiling is not raised.
The US government has so over-spent, for so many years, it does not have enough cash on hand to pay its debts AND fund ongoing operations. If the debt ceiling is not raised by Congress, then the government would only have the cash on hand which comes in each month from things like Payroll taxes. That __may__ be enough to keeps some parts of the government operating, but it would not be enough to pay off debt - or even interest on the debt.