Dimon says JPMorgan preparing for ‘potentially catastrophic’ US credit default
JPMorgan Chase CEO Jamie Dimon said that the multinational investment bank has started to prepare for a “potentially catastrophic” situation in which the United States could default on the national debt.
Dimon said in a Tuesday interview with Reuters that while the country’s largest lender has previously planned for such a scenario, and “every single time this comes up, it gets fixed,” he argued that the country “should never even get this close.”
“I just think this whole thing is mistaken and one day we should just have a bipartisan bill and get rid of the debt ceiling,” he added. “It’s all politics.”
Dimon told Reuters, “This is like the third time we’ve had to do this,” adding, “It is a potentially catastrophic event.”
Political fights over the debt ceiling previously resulted in last-minute deals in 2011 and 2017.
Dimon said Tuesday that the last time JPMorgan prepared for a potential national debt default, it cost the firm roughly $100 million.
The CEO’s remarks came the same day Treasury Secretary Janet Yellen warned congressional leaders that the U.S. is currently on track to default by Oct. 18, calling on lawmakers to raise or suspend the federal debt limit to prevent an economic crisis.
Yellen joined Senate Democrats in condemning Republicans for not backing a bill that would raise the federal debt limit and allow the federal government to pay off expenses.
“It would be disastrous for the American economy, global financial market and millions of families and workers whose financial security would be jeopardized by a delay in payments,” she said at a hearing. “Even coming very close to the deadline without raising the debt ceiling can undermine the confidence of financial markets in the creditworthiness of the United States.”
Senate Majority Leader Charles Schumer (D-N.Y.) had attempted to hold a simple majority vote on a bill that would suspend the country’s borrowing limit, though Senate Minority Leader Mitch McConnell (R-Ky.) blocked the request Tuesday.
McConnell and other Republican lawmakers have said they would not support a vote to raise or suspend the debt ceiling, arguing that Democrats should instead try to do so through reconciliation, a budget process that Democrats are using to try to pass a sweeping $3.5 trillion social spending bill.
McConnell said Tuesday, “Democrats will not get bipartisan help borrowing money so they can immediately blow historic sums on a partisan taxing and spending spree.”
“The Democratic leader knew this request would fail,” he added. “There is no chance, no chance the Republican conference will go out of our way to help Democrats conserve their time and energy so they can resume ramming through partisan socialism as fast as possible.”