Fed: U.S. default a huge risk; Fitch may slash rating

A U.S. default is the biggest risk facing the global economy, a top Federal Reserve official said just hours after Fitch Ratings warned it could slash U.S. credit ratings if the government delays bond payments.

President Barack Obama is trying to win congressional approval to raise the nation's legal debt ceiling before an August 2 deadline.

Fitch's statement follows similar warnings by Moody's and Standard and Poor's, but Fitch was the first among the big-three rating agencies to say U.S. Treasury securities could be downgraded, even for a short period of time, to a non-investment grade.

Moody's warned last Thursday that it could consider cutting the United States' top-notch credit rating if there was no progress by mid-July on a deal to reduce the deficit and raise the U.S. debt limit.