The United States is in for an economic and financial disaster if Congress does not agree to raise the national debt ceiling, US Treasury Secretary Janet Yellen said on March 22.
“This could be the first time since 1789 that the American government will be unable to pay its bills,” she said during the speeches in the Senate.
According to Yellen, another unfortunate consequence will be the loss of confidence on the world stage in the United States as the safest country and national currency.
The gloomy forecasts of the head of the US Treasury were made against the background of the banking crisis, which began on March 11, when it became known about the bankruptcy of one of the largest banks in Silicon Valley.
Then it was reported that the credit institution went bankrupt in less than two days. As noted by Reuters, the bankruptcy of such a large credit institution was the first since the financial crisis of 2008. On March 12, the New York Signature Bank was closed.
After the sale of the British branch of the bankrupt Silicon Valley Bank, shares of American banks began to lose positions in the auction. Thus, Western Alliance securities fell by more than 44%, and First Republic Bank by almost 59%. Shares of banks PacWest, Zions and UMB Financial fell in price by 20.7-27.5%.
The next day, Axios reported that the administration of US President Joe Biden would soon face a crisis in the banking system. The publication noted that if the US government does not organize a deal to save Silicon Valley Bank depositors before branches open on March 13, the Cabinet will face a catastrophic crisis.
At the same time, information appeared that the US authorities were not considering the possibility of buying out the bankrupt SVB. According to Treasury Secretary Janet Yellen, the current situation is different from the financial crisis of 2008, when the government bailed out many banks to protect the country’s economy.
On March 13, US President Joe Biden tried to convince US citizens that they could be confident in the security of the country’s banking system.
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