US Debt Crisis: Yellen Activates Another 'Extraordinary' Measure

Treasury Secretary Janet Yellen activated another extraordinary cash management measure on Tuesday to avert breaching the federal debt limit by suspending daily reinvestments in a large government retirement fund that holds Treasury debt, the department said.

In a letterto House Speaker Kevin McCarthy, Yellen pointed out that she has determined "by reason of the statutory debt limit, I will be unable to invest fully the Government Securities Investment Fund (G Fund) of the Thrift Savings Fund, part of the Federal Employees' Retirement System, in interest-bearing securities of the United States."

The Maneuver: Yellen pointed out that the statute governing G Fund investments expressly authorizes the Treasury Secretary to suspend investment in the G Fund to avoid breaching the statutory debt limit.

"My predecessors have taken this suspension action in similar circumstances. By law, the G Fund will be made whole once the debt limit is increased or suspended. Federal retirees and employees will be unaffected by this action," she wrote in the letter.