WASHINGTON – Bankers are growing increasingly fearful that the U.S. could breach the debt ceiling as the prospects for a deal ahead of a looming Oct. 17 deadline appear uncertain.

Their concern primarily centers on a key fact: Treasury bonds do more than fund the government; they buttress the financial system. Bankers warn that a default on certain Treasuries could put market collateral at risk, harm overnight lending and drain key sources of liquidity from the market.

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