Jamie Dimon: Default on US debt would be 'catastrophic'

Sen. Mike Lee (R-Utah) is vowing to filibuster a vote on the debt limit unless Democrats grant a major concession, and planned to vote against raising the limit under any circumstances.

Fellow freshman lawmaker Sen. Marco Rubio (R-Fla.) took to the pages of The Wall Street Journal Wednesday to explain why he will vote against raising the limit.

Rubio set a high threshold for winning his vote on increasing the debt limit, saying it would have to be the last hike ever to the limit and that it must be accompanied by fundamental tax reform, a regulatory overhaul, a balanced-budget amendment, discretionary spending cuts and reforms to entitlement programs.

Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke have warned lawmakers that the debt limit should not be used for political gain, as failing to raise it could lead to a default on U.S. debt, which would destabilize the global economy.

Dimon argued that refusing to raise the debt limit would inject uncertainty into the financial markets.

"If anyone wants to push that button ... I think they're crazy," he said.

As part of a sprawling interview with Chamber President and CEO Thomas Donohue, Dimon hit an optimistic note on the American economy and the state of American corporations.

"Most things are better than a year ago," he said, adding that the economy is "going to come back ... I don't know exactly when, but we'll have a pretty damn good decade when it does."

He also threw his support behind the Federal Reserve and its controversial second crack at quantitative easing.

Dimon said Federal Reserve Chairman Ben Bernanke has done "an extraordinary job" guiding the American economy through the recent financial crisis, and backed up the central bank chairman's assertions that the Fed's policies are not driving inflation across the globe.

"It's not what's causing inflation overseas, that's just not true," Dimon said.

Rather, Dimon said the Fed's plan to buy back $600 billion of Treasury bonds amounts to a very small fraction of the total value in America's financial markets, and could help boost America's economy.

"The most important thing is to get the United States growing again and getting people back to work," he said.

However, Dimon was quick to criticize various government efforts to remake financial markets, singling out new limits on debit card fees. That provision of the Dodd-Frank financial reform law, dubbed the Durbin amendment due to the primary backing of Sen. Dick Durbin (D-Ill.), has been hotly criticized by banks.

"The Durbin amendment is basic price-fixing at its worst," he said.

He also mounted a defense of derivatives, which have been widely criticized for contributing to the financial crisis and are subject to increased regulations under Dodd-Frank.

Dimon argued derivatives did not cause the problems that led to the financial crisis, and are largely used by non-financial companies to hedge their risks on various products they use.

"They should be allowed to do that," he said, adding that efforts by the Commodity Futures Trading Commission to regulate the financial product "would damage America."

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