U.S. Treasury Secretary Janet Yellen speaks during a news conference at the IMF and World Bank Annual Meetings at IMF headquarters, October 14, 2022 in Washington, DC. Drew Angerer/Getty Images
Treasury Secretary Janet Yellen just dialled up the heat on debt-default worries in some of her most dire warnings yet.
Speaking on Tuesday at the Independent Community Bankers of America Capital Summit, Yellen said a US default could "break" markets and leave millions of Americans jobless in what could lead to an economic slump as bad as the Great Recession, per CNBC.
"A default would crack open the foundations upon which our financial system is built," Yellen said.
"It is very conceivable that we'd see a number of financial markets break - with worldwide panic triggering margin calls, runs and fire sales," she added.
US debt default fears have been heating up as a months-long political deadlock over the government's borrowing limit continues. Lawmakers have been unable to break the impasse even though the Treasury is set to run out of money by June 1, according to some estimates, if the $31.4 trillion ceiling isn't lifted by then.
Yellen has made a number of warnings about the risk of a US default, repeatedly urging Congress to lift the ceiling to avoid potentially "catastrophic" fallout.
"Our current best estimate underscores the urgency of this moment: it is essential that Congress act as soon as possible," Yellen said at the summit.
She added that a default would "generate an economic and financial catastrophe" and lead to "an unprecedented economic and financial storm" that would immediately cease the government's Social Security payments to 66 million Americans.