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 started running scenarios forecasting the effects of default if legislators fail to suspend the borrowing caps before a looming deadline. He told Reuters a default would be a potentially catastrophic event, adding that Congress should eventually vote to abandon the debt ceiling altogether.
Every single time this comes up it gets fixed, but we shouldn't get this close ever. I just think this whole thing is wrong and one day we should have a bipartisan bill and get rid of the debt ceiling. It's all politics, Dimon said in the interview.
While credit limit hikes are typically routine business on Capitol Hill, negotiations between Republicans and Democrats over 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, Democrat lawmakers blocked consideration of a Democratic-backed bill that tied a debt ceiling hike to prevent government funding and hurricane relief. If an extension was given, 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 on its client contracts.
If I remember correctly, the last time we got prepared for this, it cost us $100 million, Dimon said.