JPM’s Jamie Dimon warns of market panic as US nears default


Jamie Dimon, Chairman and CEO of JPMorgan Chase and Company, testifies before a Senate Banking, Housing and Urban Affairs hearing on the ‘Annual Oversight of the Nation’s Largest Banks,’ on Capitol Hill in Washington, D.C. United States, September 22, 2022.

Elizabeth Frantz | Reuters

JPMorgan Chase CEO Jamie Dimon said Thursday that markets will be gripped by panic as the United States nears a possible default on its sovereign debt.

An actual default would be “potentially catastrophic” for the country, Dimon told Bloomberg in a TV interview. Dimon said he expects the worst-case scenario to be averted as lawmakers will be forced to respond to growing concern.

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

Dimon joined a host of business figures and administration officials making dire predictions about the consequences of not raising or suspending the US debt ceiling and allowing the world’s largest economy to default. on its obligations. Treasury Secretary Janet Yellen said the idea that the country might default should be “unthinkable” and would lead to economic disaster.

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

But “it’s a very bad idea, because panic becomes something that is not good,” he added. “It could affect other markets around the world.”

Crisis unit

JPMorgan, the largest US bank with approximately $3.7 trillion of assets, is preparing for the risk of a US default, Dimon said.

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

The bank’s so-called war room meets once a week, a pace that will increase to daily meetings around May 21 and then three meetings a day thereafter, he said.

He urged politicians from both major US parties to compromise and avoid a ruinous outcome.

“Please negotiate a deal,” Dimon said.

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