Bond King Bill Gross Calls U.S. Default 'Unimaginable'

Financial institutions are reacting to concerns that Congress will fail to raise the debt ceiling by midnight tonight, which would mean the government wouldn't have enough money to pay all of its bills.

On Tuesday, Fitch Ratings warned that if lawmakers don't find a solution, it could downgrade the nation's credit rating by the end of the year.

One of the biggest concerns is whether the Treasury Department would be unable to pay bondholders and default on its debt obligations.

Bill Gross, co-founder of the Pacific Investment Management Company, or PIMCO, said a default would be "catastrophic."

PIMCO is the world's largest bond investor, and manages about $2 trillion in assets. The firm doubled its share of foreign securities in September.

While the possibilities of a downgrade and a default might be seen as signs of concern for PIMCO that U.S. Treasury bills aren't safe, Gross has said he is confident that the U.S. won't default.

Gross says the government pulls in enough cash each month to pay off its debt obligations, but he does predict an economic slowdown.