JPMorgan’s Jamie Dimon : U.S. Default Would Be ‘Potentially Catastrophic’

JP Morgan has begun preparing for the possibility of the United States hitting its debt limit, Chief Executive Jamie Dimon said on Tuesday, adding he nevertheless expected policymakers to find a solution to avoid that “potentially catastrophic” event. The country’s largest lender has begun scenario-planning for how a potential U.S. credit default would affect the repo and money markets, client contracts, its capital ratios, and how rating agencies would react. “This is like the third time we’ve had to do this, it is a potentially catastrophic event,” he said.

“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,” he added.

Democrats had hoped to avoid a partial government shutdown and to suspend the federal debt ceiling with a single vote. But they were blocked on Monday in the Senate by Republicans, who said the two matters should be dealt with separately.

Fiscal brinkmanship has become a regular feature of U.S. politics over the past decade thanks to ongoing partisan polarization, with debt ceiling deals coming down to the wire in 2011 and 2017. Dimon said as part of its preparation the bank was combing through its client contracts, a resource-intensive process. “You’ve got to check the contracts to try to predict it out ... If I remember correctly, the last time we got prepared for this, it cost us $100 million,” he said.












SOURCE: FOXNEWS









SOURCE: CNBC