Kent Nishimura / Los Angeles Times via Getty Images
- CEOs of the biggest banks are meeting with Biden to push for a debt ceiling raise and avoid default.
- The GOP has been blocking Democrats' attempts to raise the ceiling on their own.
- The showdown is pushing Democrats to devise a solution before the US defaults on October 18.
- See more stories on Insider's business page.
President Joe Biden is calling in major bank leaders to discuss the potential fallout from a debt ceiling default, in the administration's latest effort to try and force Republicans to budge. Republicans have been refusing to allow the Democrats to move forward on any measures to prevent default, saying Democrats have the power to raise it themselves through party-line reconciliation.
Biden has said he can't guarantee the US won't default: "That's up to Mitch McConnell."
The Washington Post first reported on Wednesday that CEOs of some of the biggest banks, including Bank of America's Brian Moynihan and JPMorgan Chase's Jamie Dimon, are meeting with Biden to discuss the economic consequences of allowing the US to default on its debt.
Treasury Secretary Janet Yellen will also attend, along with AARP head Jo Ann Jenkins. Seniors are one group that could acutely feel the impact of a default, with Yellen warning in a Wall Street Journal opinion piece that nearly 50 million seniors could stop getting Social Security checks in the event of default.
"The president will detail the Republican obstruction that has led us to this point, with the GOP refusing to do the right thing and fulfilling its bipartisan responsibility to address the debt limit," a White House official told the Post.
Dimon previously told Reuters that he supports legislation to raise the debt ceiling, saying the failure to do so would be a "potentially catastrophic event."
"Every single time this comes up, it gets fixed, but we should never even get this close," Dimon said. "I just think this whole thing is mistaken and one day we should just have a bipartisan bill and get rid of the debt ceiling. It's all politics."
This comes on the same day Democrats are planning to hold a vote to suspend the debt ceiling - a measure Republicans are likely to block, given their firm stance they will not help Democrats raise the debt ceiling because they do not want to help fund the $3.5 trillion social-spending package.
On Monday, Senate Minority Leader Mitch McConnell accused Democrats of "sleepwalking" toward a default, even after blocking every attempt by Democrats to raise the ceiling with a simple, non-reconciliation majority. Democrats are now at a "breaking point," Insider's Kimberly Leonard and Joseph Zeballos-Roig report, as GOP members agree the debt limit should be increased while unilaterally blocking attempts by Democrats to raise it.
Now, Democrats are working on a tight deadline to devise a solution to raise the debt limit before October 18, when Yellen said the government will run out of money.
Moody's Analytics warns of dire economic consequences if the country doesn't raise the debt ceiling. That includes shedding 6 million jobs, with unemployment shooting up to 9%. A default could also wipe out $15 trillion in household wealth, as stocks crash, the ratings agency said.