POLITICS
10/04/2013 11:27 am ET

Banks Stockpile Cash For Government Default They Say Won't Happen

Banks are totally not worried about the U.S. government defaulting, sparking a nightmarish financial panic. Yes, they're stocking extra cash in ATMs to satisfy cash-hungry zombie hordes. But they're sure they won't need it!

Bank executives are adding 20 to 30 percent more cash to their ATMs and re-reading their dog-eared copies of What To Expect When You're Expecting A Financial Shitstorm, according to the New York Times and the Financial Times.

"To guard against possible mayhem from a debt ceiling crisis, some of the nation’s largest banks are deploying plans that were developed in 2011 — when the government first looked as if it were on the verge of surpassing its debt ceiling limits," write the NYT's Susanne Craig and Jessica Silver-Greenberg.

This is all just in case House Republicans pull the trigger on the gun they're holding to the head of the U.S. economy by refusing to raise the federal government's borrowing limit, or debt ceiling. That could cause the government to default on its debts, triggering a crisis that would be like 2008 all over again.

At the same time, these banks are telling their clients they think there is a "zero percent" chance of such a crisis happening. Bank strategists and economists all remember the last time we came close to disaster, in August 2011, and politicians managed to pull out a deal at the last minute that time. So of course they expect the same thing to happen again. After all, past performance is a gold-plated guarantee of future results, right?

Wall Street generally seems to share this attitude. The stock market has drifted lower a bit in the past few weeks, with the Dow Jones Industrial Average down about 4 percent. But the selling has been mostly calm. On Friday, in fact, the Dow was up a smidgen, about 13 points. Bond yields were slightly higher, the opposite of what you would expect in a panic.

But there are small signs that Wall Street doesn't exactly see a "zero percent" chance of a crisis: The interest rate on 30-day Treasury bills on Thursday turned higher than the interest rate on one-year T-bills, a freakish occurrence that suggests investors are dumping very short-term Treasury debt, just in case the government can't pay it back.

ALSO ON HUFFPOST:

The 10 Biggest Banks In The U.S.

CONVERSATIONS