December 2, 2023

JPMorgan Chase & Company President and CEO Jamie Dimon testifies on “Annual Oversight of the Nation’s Largest Bank” at a Senate Banking, Housing and Urban Affairs hearing on Capitol Hill in Washington, U.S., September 22, 2022.

Elizabeth Franz | Reuters

JPMorgan Markets are set to panic as the U.S. approaches the possibility of defaulting on its sovereign debt, Chief Executive Jamie Dimon said on Thursday.

An actual default could be “catastrophic” for the country, Dimon told Bloomberg in a television interview. However, Dimon said he expected the worst to be avoided as lawmakers would be forced to respond to growing concerns.

“The closer you get to it, the more panic you have in the form of stock market volatility and treasury volatility,” he said.

Dimon joined many in business and government in making dire predictions about the consequences of failing to raise or suspend the U.S. debt ceiling and allowing the world’s largest economy to default on its bonds. Treasury Secretary Janet Yellen has said the idea of ​​a possible U.S. default should be “unthinkable” and would spell economic disaster.

“If it gets to that panic point, people have to react, and we’ve seen that before,” Dimon said.

But “it’s a really bad idea because the panic turns into something bad,” he added. “It could affect other markets around the world.”

war room

JPMorgan Chase, the largest bank in the United States, owns about $3.7 trillion On the asset side, Dimon said it has been bracing for the risk of a U.S. default.

Such an event would ripple through the financial world, affecting “contracts, collateral, clearinghouses, and certainly customers around the world,” he said.

The bank’s so-called war room, which meets weekly, will change to daily meetings around May 21 and three daily thereafter, he said.

He urged politicians from both major political parties in the United States to compromise and avoid a devastating outcome.

“Please negotiate a deal,” Dimon said.

In the wide-ranging interview, Dimon said he speaks daily with regional bank executives amid concerns over the collapse of Silicon Valley Bank in March. Last week, JPMorgan emerged as the winner of a government-brokered First Republic auction.

He said regional banks were “pretty strong” and would have good financial results, but managers were concerned after a bank run that led to the failure of three companies.

“I think we have to assume there’s more to come” of the regional banking crisis, he said.