'This Is Where It All Happens': Exclusive Look Inside Top-Secret Auction Room

PHOTO: In a top-secret room inside an unmarked building in Washington, D.C., the biggest auctions in the world take place.
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In a top-secret room inside an unmarked building in Washington, D.C., the biggest auctions in the world take place. It's the Bureau of Public Debt's Auction Room: the federal government's lifeline -- and a place the public never gets a chance to see.

ABC News got an exclusive look inside this auction room. Our guide: Assistant Treasury Secretary Mary Miller -- the most powerful woman most people have never heard of. Three hundred times a year she supervises auctions that reveal whether the world is willing to lend the U.S. government more money by buying IOUs -- better known as U.S. Treasury Bonds.

"This is where it all happens," Miller told ABC News. "But it is a completely invisible process to most investors. This is how we finance the U.S. government. Right here."

The auction room's location is tightly guarded secret because any disruption would interrupt the flow of money that keeps the federal government operating. To prevent any disruption caused by power outages, natural disasters or terrorist attacks, there are also two back-up locations -- located outside of Washington at undisclosed sites.

"We want to protect the integrity of the auction process," she said. "We want to protect the identity of the bidders. We want to have an auction process that everyone trusts, and part of that is having a secure environment."

As ABC's cameras rolled, the auction began. The goal was to borrow $28 billion in just 90 minutes. It's a staggering sum of money -- enough to fund the entire state budget for Indiana for a year or, in this case, to fund the federal government, everything from Social Security checks to the Pentagon, for a little less than three days.

Auction Room: $1 of $3 Owed to Foreigners

On the other end of the room's computer connections were the investors -- most of them from the U.S. However, about $1 of every $3 in debt is owed to foreigners, mostly to China (which owns $1.16 trillion of U.S. debt), Japan ($882 billion) and the United Kingdom ($272 billion).

The auction started slowly. After a little more than a half hour, there were buyers for only three percent of the $28 billion in treasury bonds offered for sale. But the staff inside the auction room wasn't worried at all. The big buyers almost always wait until the auction is almost over before jumping in.

Howard Osborne, director of financing operations in the auction room, told ABC News his job did not get nerve-wracking.

"We're professionals," he said of the auction staff.

The one thing that would make them lose sleep, however, is the prospect of Congress failing to raise the federal debt ceiling. If Congress doesn't raise it by early August, Assistant Treasury Secretary Miller warned, the borrowing has to stop. The auction room will go dark with what she said are unthinkable economic consequences.

"If we get to that point where we have not raised the debt ceiling, we would be limiting our ability to borrow in the markets," she said. "We would not be able to finance the government and meet all our obligations."

By the end of Tuesday's auction, $28 billion of treasury bonds were sold, proving that, for now, there seems to be no shortage of buyers for U.S. treasuries.

"I think the world sees the U.S. as a very safe and secure market," Miller said. "We continue to attract investors, and that's not something we ever want to waver from."

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