Global Courant 2023-05-12 05:39:18
JPMorgan Chase and Company President and CEO Jamie Dimon testify before a Senate Hearing on Banking, Housing and Urban Affairs on “Annual Oversight of the Nation’s Largest Banks”, on Capitol Hill in Washington, US, September 22, 2022.
Elisabeth Frantz | Reuters
JPMorgan Chase CEO Jamie Dimon said Thursday markets will be gripped with panic as the US approaches a possible default on its national debt.
An actual default would be “potentially catastrophic” for the country, Dimon told Bloomberg in a televised interview. Dimon said he expects the worst-case scenario to be avoided, however, as lawmakers will be forced to respond to the growing concern.
related investment news
“The closer you get to it, the more you panic” in the form of stock market volatility and treasury turmoil, he said.
Dimon joined a host of businessmen and government officials in making gloomy predictions about the consequences of not raising or suspending the US debt limit and the world’s largest economy defaulting on its bonds. Treasury Secretary Janet Yellen has said the idea that the country could default should be “unthinkable” and lead to economic disaster.
“When it gets to that point of panic, people have to react, we’ve seen that before,” Dimon said.
But “it’s a really bad idea because panic becomes something that’s not good,” he added. “It could affect other markets around the world.”
War room
JPMorgan, the largest US bank with approx $3.7 trillion in assets, has prepared for the risk of US bankruptcy, Dimon said.
Such an event would sweep through the financial world, impacting “contracts, collateral, clearinghouses and certainly impacting clients around the world,” he said.
The bank’s so-called war room meets once a week, a pace that will shift to daily meetings around May 21 and three meetings a day after that, he said.
He urged politicians from both major American parties to compromise and avoid a disastrous outcome.
“Please negotiate a deal,” Dimon said.
Other banks
In the extended interview, Dimon said he speaks daily with regional bank executives amid concerns sparked by Silicon Valley Bank collapse in March. Last week, JPMorgan emerged as the winner in the government-brokered auction for First Republic.
Regional banks are “quite strong” and will deliver good financial results, but managers are concerned because of the bank runs that brought down three companies, he said.
“I think we have to assume there will be a little bit more” before the regional banking crisis, he said.
(TagsToTranslate)Breaking News: Markets
