JPMorgan Chase & Co has begun preparing for the possibility of the United States hitting its debt limit, CEO Jamie Dimon told Reuters on Tuesday, adding he nevertheless expected policymakers to find a solution to avoid that 'potentially catastrophic' event.
With federal funding due to expire on Thursday and a potential debt default by October 18, Democrats who narrowly control the Senate and House are racing to head off fiscal disaster while also passing President Joe Biden's ambitious $3.5 billion spending package.
JPMorgan, the country's largest bank, has begun scenario-planning for how a potential U.S. credit default would affect the repo and money markets, client contracts, its capital ratios, and how ratings agencies would react, Dimon said in an interview.
'This is like the third time we've had to do this, it is a potentially catastrophic event,' he said, referring to prior Congressional deadlocks over federal debt limits.
JPMorgan Chase CEO Jamie Dimon says the bank has begun preparing for the possibility of the United States hitting its debt limit, calling it a 'potentially catastrophic' scenario
With pressure mounting, Biden and Democrats are trying to head off a fiscal emergency as well as pass their massive $3.5 trillion spending bill
'Every single time this comes up, it gets fixed, but we should never even get this close. I just think this whole thing is mistaken and one day we should just have a bipartisan bill and get rid of the debt ceiling. It's all politics,' he added.
Congressional Democrats are scrambling to find a way to raise the government's $28.4-trillion borrowing cap before the Treasury Department runs out of ways to service the nation's debt.
Treasury Secretary Janet Yellen has said the Treasury will likely exhaust extraordinary measures by October 18, potentially triggering the first federal credit default in history.
Democrats had hoped to avoid a partial government shutdown and to suspend the federal debt ceiling with a single vote. But they were blocked on Monday in the Senate by Republicans, who said the two matters should be dealt with separately.
Fiscal brinkmanship has become a regular feature of U.S. politics over the past decade thanks to ongoing partisan polarization, with debt ceiling deals coming down to the
