JPM's Dimon says US default would be 'potentially catastrophic event'
Dimon said JPMorgan Chase’s preparations included reviews of how credit agencies would react
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JPMorgan Chase CEO Jamie Dimon warned Tuesday that a U.S. default on outstanding debt obligations would have devastating consequences for the economy.
JPMorgan Chase has begun running scenarios forecasting the effects of a default if lawmakers fail to suspend the borrowing cap before a looming deadline. Dimon told Reuters a default would be a "potentially catastrophic event," adding that Congress should eventually vote to eliminate the debt ceiling altogether.
"Every single time this comes up, it gets fixed, but we 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. It's all politics," Dimon said in the interview.
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While debt-ceiling hikes are typically routine business on Capitol Hill, talks between Republicans and Democrats on suspending the limit broke down in recent days amid disagreements over President Biden’s legislative agenda. Treasury Secretary Janet Yellen said U.S. cash reserves would run out by Oct. 18.
Earlier this week, Republican lawmakers blocked consideration of a Democrat-backed bill that tied a debt ceiling hike to stopgap government funding and hurricane relief. Without an extension, the U.S. government would default on its outstanding debt obligations for the first time in history.
Dimon said JPMorgan Chase’s preparations included reviews of how credit agencies would react to a default, as well as the potential impact to its client contracts.
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"If I remember correctly, the last time we got prepared for this, it cost us $100 million," Dimon said.