Banks prepare for freaked-out customers

There's no telling what might happen if the U.S. government is forced to default because a few dozen crazies in the House refuse to lift the debt ceiling. But risk-averse bankers are preparing for the worst. From the FT:

Two of the country's ten biggest banks said they were putting into place a "playbook" last used in August 2011 when the government last came close to breaching the debt ceiling. One senior executive said his bank was delivering 20-30 per cent more cash than usual in case panicked customers tried to withdraw funds en masse. Banks are also holding daily emergency meetings to discuss other steps, including possible free overdrafts for customers reliant on social security payments from the government. The US Treasury has said the US could run out of money to pay its bills as early as October 17 if there is no congressional deal.

For what it's worth, House Speaker John Boehner has been telling colleagues that he'll do whatever is necessary to avoid default. That includes relying on House Democrats to push through an extension. From the Washington Post:

Relying on a majority of House Democrats, or less than the majority of House Republicans to pass a debt ceiling extension likely would infuriate some of the most conservative members of the GOP conference, but would be a repeat of a strategy that ensured passage earlier this year of measures to avert another fiscal impasse, to renew the Violence Against Women Act and to provide federal relief to victims of Hurricane Sandy.

Wall Street clearly has its doubts. With 90 minutes of trading to go, the Dow is off 120 points as more traders begin to wonder just how much longer the hostage standoff can continue.