Jamie Dimon says JPMorgan is preparing for the US to default on its debt, warning that such a scenario would be 'potentially catastrophic'

Jamie Dimon, CEO of JPMorgan Chase & Co. Jamie Watson/AFP via Getty Images
Jamie Dimon stated that JPMorgan began preparing for the possibility of the US defaulting on its debt.

This scenario was "potentially disastrous," he said. He expressed hope that legislators will find a solution to the crisis.

He told Reuters that "every time this happens, it gets fixed", but that we shouldn't even get this close."

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Jamie Dimon, President and CEO of JPMorgan Chase said that his bank had begun preparing for the possibility of the US defaulting on its debt. He described the scenario as "potentially disastrous" but he hopes legislators will find a solution.

"This is the third time that we have had to do it." It could be catastrophic," Dimon said to Reuters prior to a ribbon-cutting ceremony at Washington's newest location of his bank.

According to the executive, such an outcome could have a negative impact on money markets and repurchase agreements as well as how rating agencies will react. His bank is also beginning to review client contracts, which requires substantial resources.

"You have to look at the contracts in order to be able to predict it." He said that $100 million was the cost of last year's preparation for this event.

Reuters was told by Dimon that he supports a bipartisan bill to eliminate the debt ceiling.

He said, "Every time this comes up it gets fixed. But we shouldn't even get that close." "I think that this whole thing is wrong. We should have a bipartisan bill to get rid of the debt ceiling. It's all politics."

Monday night, Senate Republicans defeated a bill passed by the House that would have raised debt ceiling and prevented government shutdown.

Democrats are now rushing to increase the $28.4 trillion borrowing limit for the government. They have until October 18th to do this.

Janey Yellen reiterated her call to bipartisanship and told lawmakers that she will exhaust all extraordinary measures if Congress fails to act to increase or suspend the debt limit before that date.

Analyst consensus suggests that the crisis will be avoided, but some, such as Chris Zaccarelli (CIO at Independent Advisor Alliance), are concerned.

He said via email that "Most likely, the Congress will either increase the debt ceiling before end of week or the Federal Reserve could take in extraordinary measures." "It's still a sign that the dysfunctional times are manifested by the fact that Republicans will not join Democrats in passing a higher debt ceiling.

Since its introduction in 1917, the debt ceiling has been a source of contention for both sides. It was introduced to encourage government borrowing to slow down.