JPMorgan Chase & Co.’s Jamie Dimon took a jab at Donald Trump for encouraging Republican lawmakers to dig in over raising the debt limit even if it means default — an outcome his bank is prepping for by convening a weekly war room.
“It’s one more thing he doesn’t know very much about,” Dimon said in an interview with Bloomberg Television Thursday, when asked about the former president’s comments. “Anyone who’s anyone knows that is potentially catastrophic,” he said.
Trump said during a his first interview on CNN since 2016 that Republicans should continue to push for spending cuts and “do a default” if they don’t get them. Congressional Republican leaders are demanding promises of cuts before they approve a higher debt ceiling, while President Joe Biden has insisted on a “clean” increase to the $31.4 trillion borrowing limit, with budget talks kept separate.
The US inching closer to a potential default could spark panic among investors and affect other markets outside of the US, Dimon said. The war room the bank’s been convening will likely meet more frequently — and potentially multiple times a day — as the clock ticks toward June 1, when Treasury Secretary Janet Yellen has said special accounting measures to make cash available could run out.
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“I don’t think it’s going to happen — because it gets catastrophic, and the closer you get to it, you will have panic,” Chief Executive Officer Dimon said Thursday. “It affects contracts, collateral, clearing houses, clients – it affects clients differently around the world. You have to then anticipate what people are going to do.”
Dimon has long advocated for the removal of the debt ceiling, which is a cap on government borrowing that affects the US’s ability to pay existing bills. Yellen has warned a default could cause an economic and financial “collapse,” putting payments to US bond investors, benefits recipients and federal contractors, among others, in jeopardy.
“It’s very unfortunate. It should never happen this way,” Dimon said.
