By Steve Holland and Trevor Hunnicutt
WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen, JPMorgan Chase (NYSE:JPM) &Co Chief Executive Jamie Dimon and Nasdaq CEO Adena Friedman warned on Wednesday of financial and economic catastrophe if Congress fails to raise the debt ceiling.
The three and other business leaders met U.S. President Joe Biden at the White House to pressure Republicans in Congress to vote for a debt ceiling increase, saying their opposition will take America "right to the brink." Yellen has warned the Treasury would have "very limited cash" after Oct. 18.
"This would be a catastrophic outcome," Yellen said on Wednesday. "It must be resolved immediately."
Republicans want Democrats to raise the debt ceiling using reconciliation, a process that would not require Republican votes. Democrats have refused, saying Republicans should join them in the vote because the debt includes about $8 trillion in spending approved during Republican Donald Trump's presidency.
A rift over the debt limit has been growing between corporate America and congressional Republicans, who are traditionally aligned on economic issues.
A U.S. debt default would severely hurt the country's credit rating, plunge the global financial system into turmoil and pose a major risk https://www.reuters.com/world/us/what-watch-market-stress-us-debt-ceiling-deadline-nears-2021-10-05 to company stock prices.
Friedman said that an extended delay in raising the U.S. debt limit would cause markets to react "very, very negatively," adding: "We urge action as quickly as possible."
Dimon said the cascading effect of a U.S. market meltdown could lead to global catastrophe for the world.
"We should never even get this close," he said. "This is a time when we should show "American competence, not American incompetence."
Jane Fraser, chief executive of Citigroup Inc (NYSE:C), said a failure to raise the ceiling would also hurt everyday consumers by increasing borrowing costs "very quickly," including credit card and mortgage debts.
"We don’t need a catastrophe of our own making to undermine the progress we have made."