(Bloomberg) --JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said his company has convened a weekly war room to plan how it would react to a potential US default amid protracted negotiations in Congress over the debt ceiling.
The US inching closer to a potential default could spark panic among investors, Dimon said in an interview with Bloomberg Television. That could ultimately impact other markets outside of the US, he said.
"Anyone who's anyone knows that is potentially catastrophic," he said. "I don't think it's going to happen because it gets catastrophic and the closer you get to it, you will have panic."
Read more:
Dimon said the war room 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.
"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," he said. 'It's very unfortunate, it should never happen this way."
Dimon has long advocated for the removal of the so-called 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 catastrophe, putting payments to US bond investors, benefits recipients and federal contractors, among others, in jeopardy.
President Joe Biden and congressional Republicans are locked in a showdown over raising the $31.4 trillion borrowing limit, with GOP leaders demanding promises of future spending cuts before they approve a higher ceiling. Biden has insisted on a "clean" increase, with budget talks kept separate.
© 2023 Bloomberg L.P.
