WASHINGTON — When elephants dance, the mice get trampled.

That is how one lobbyist described the reasons banks have remained largely silent on the debt ceiling negotiations, despite the enormous impact that a default would have on the economy.

Industry representatives, most of whom were unwilling to talk on the record, said they don't have the political clout to advance a solution, and fear advocating for a particular plan could open them up to criticism or reprisals, such as tax increases.

Even as the Obama administration urges them to play a more public role, several industry insiders said it's better to wait with lips sealed and fingers crossed than to risk undercutting negotiations at the last minute.

"I wish this was the days where we could run up to the Hill and we could scream and people would listen to us, but sometimes people don't care what we think," said one lobbyist for a large bank, who spoke on condition of anonymity. "The people that need to be convinced that raising the debt ceiling is important don't like big, Wall Street banks."

Instead, banks have quietly seized opportunities behind the scenes to remind policymakers of the consequences of not raising the debt ceiling in a timely manner. Those conversations have largely occurred in one-off situations during meetings on other topics, however, rather than through any organized lobbying effort.

The lack of activity stands in stark contrast to banks lobbying campaign to delay a rule that would limit interchange fees on debit card transactions. While the issue was important to financial institutions, the swipe fee rule's impact is dwarfed by the potential repercussions if the U.S. defaults.

"We are doing a lot less than you would think," said another financial services executive. "The level of activity is not representative of the severity of the potential impact."

It's not clear that the activity will pick up this week, even if negotiations continue to drag on and a default appears more likely. For one, banks and their trade groups can't mount a coordinated lobbying campaign overnight, the financial services executive said.

"At this point, if the negotiators have determined based on all the factors and information available to them, politically speaking, that there's no deal, then it would be a Herculean lift for the business community to change their minds," the executive said.

The other problem, the lobbyist said, is that the debate is centered on the politically charged issues of lowering entitlements and raising revenues — something the banks don't view as their issue.

The big bank lobbyist said it's possible that if there is no agreement by the middle of the week, some banks will start to be more vocal.

"Even then …I would encourage our folks, before we get too vocal, to sit back and think, 'Is saying anything going to help the cause or hurt the cause?'" he said. "It's not entirely clear it would help."

In the meantime, banks are leaving it to trade groups to make the case for a debt limit increase.

The Financial Services Forum, Financial Services Roundtable, the Securities Industry and Financial Markets Association and U.S. Chamber of Commerce, among others, have sent letters to Congress and the administration and have appeared on news programs

"Restoring balance to our national finances by cutting excessive government spending and reforming entitlements is essential, but we must not fail to meet our existing obligations," Robert Nichols, the president and chief executive of the Financial Services Forum, wrote in a joint USA Today op-ed with U.S Chamber president Tom Donahue, that outlined the possible consequences of default.

For the most part, the groups have focused on educating people about the possible consequences of default, rather than promoting any of the proposals released by Republicans, Democrats and the White House.

SIFMA, for example, hosted a conference call Tuesday with a senior economist at Bank of America and JPMorgan Chase's global head of fixed income strategy to talk about the potential market impacts of a credit rating downgrade.

"I think the strong view of the market is that Congress will figure out a way to get the debt ceiling raised in time and they will avoid a default," said Terry Belton of JPMorgan Chase. "The big question is will we go through this process with enough fiscal discipline to be able to avoid a downgrade."

While a default would be much worse, a downgrade could increase Treasury funding costs by roughly $100 billion a year. "That's money being taken away from other goods and services," Belton added.

Bill Killmer, the senior vice president for legislative and political affairs for the Mortgage Bankers Association, said the group has been tracking the debt reduction plans for provisions that would significantly impact the industry. For example, one Democratic proposal unveiled last weekend referred to $30 billion in revenue that would be raised through reforms to Fannie Mae and Freddie Mac.

MBA reached out to lawmakers and Congressional staff about the proposed changes, walking a fine line between engagement and advocacy.

"It's trying to stay close to the conversation without trying to intrude too deeply into the actual conversation," Killmer said. "I'd say that there is a nuanced and cautious effort by most groups that are engaged in it."

That hasn't stopped "everyone and their brother" from pressuring the banks to speak up, according to one regional bank lobbyist.

"Any meeting that a banker is at within the administration, they're always asked to weigh in with Congress," the lobbyist said.

Some observers said the industry should have been speaking up from the beginning.

"The buy-side and the banks should be sitting in the same room talking about these things and we're not. I think that's a big problem," said Chris Whalen, managing director at Lord, Whalen LLC's Institutional Risk Analytics. "This industry needs to stand up on its hind legs and make common cause with other industry sectors around the U.S. and just demand that politicians do the right thing."

But the players with the highest visibility may have the least credibility, Whalen said.

"As much as I respect Jaime Dimon as an operator, he's not the guy you want out there selling fiscal sobriety because people hate him," he said. "Lloyd Blankfein, no."

Observers said it makes little sense for banks to choose sides, or upset the apple cart.

"If you think there's going to be all sorts of international implications and financial markets will be in turmoil, you don't want to throw fuel on the fire by saying, 'Yes that in fact will be the case,'" said Gil Schwartz, a partner with Schwartz & Ballen LLP and a former lawyer for the central bank. "And you don't want to criticize either party of not being able to compromise and come to a resolution of this thing."

Many in the industry are convinced they won't have to weigh in. While banks are deeply afraid of the impact of default, most continue to believe that the debt ceiling will be raised.

Many banking lobbyists are former government employees and have seen Congress approach its borrowing limit before.

"This is how this process plays out just about every time, and so I don't think anybody believes that they will actually allow for default," the regional bank lobbyist said. "I think what people are now focused on is the potential impact for downgrade as a result of the fiscal situation, and that is something that none of us are going to be able to have an impact on."

With negotiations at loggerheads, banks have started to take steps to prepare for a possible default or at least a downgrade of U.S. debt by the ratings agencies.

Observers said banks are looking carefully at capital and other triggers — not only for U.S. government obligations but all other agency paper — and at what impact a rating downgrade would have on capital and margin requirements and all other obligations.

"It's a real shocking development that people are having to take the scenario more seriously," said Karen Shaw Petrou, a managing partner at Federal Financial Analytics Inc. "I think that's going to be the longest term cost of this crisis, even if the debt ceiling has ultimately been increased."

Schwartz said the more important question may be what action will regulators take if the government defaults, or if the credit rating is downgraded. Will regulators force banks to write down their holdings of government securities? What about pressures from foreign customers who want to horde liquidity?

Schwartz said he expects "a great deal of government forbearance" if a catastrophe results.

"I think banks have a lot of confidence the government will address issues the same way they dealt with the financial meltdown, which is they'll be as accommodating as they have to be," he said.

Testifying before the Senate Banking Committee on July 14, Federal Reserve Chairman Ben Bernanke said the central bank would do what it could to preserve "the operationality of the system" — but added a significant caveat.

"I want to eliminate any expectation that the Fed through any mechanism could offset the impact of a default on the government debt," Bernanke said. "I think that it would be a very destructive event and while the Fed would do what it could, again, I don't think it's fair to have any expectations that we could offset the impact of that."