JPMorgan chairman warns US default could be a disaster

America’s largest lender has started to plan scenarios on how a US credit default would affect the repo and money markets, customer contracts, their capital ratios and how rating agencies would react, Dimon said in an interview.

“It’s like the third time we have to do it, it’s a potentially catastrophic event”, noted.

“Every time that happens it corrects itself, but we should never be this close. I think this is all a mistake and one day we should have a bipartisan bill and get rid of the debt ceiling. . It’s all a matter of politics. “he added.

Congressional Democrats are struggling to find a way to increase the government’s debt limit by $ 28.4 trillion before the Treasury Department runs out of money to pay off the nation’s debt.

The Secretary of the Treasury, Janet Yellen, said that the Treasury will likely exhaust the extraordinary measures by October 18.

Democrats hoped to avoid a partial government shutdown and suspend the federal debt ceiling with one vote, but were blocked in the Senate Monday by Republicans, who said the two issues should be dealt with separately.

Dimon said that as part of his preparation, JP Morgan reviews its clients’ contracts, a resource intensive process.

“We have to review the contracts to try to predict it (…) If I remember correctly, the last time we prepared for that, it cost us $ 100 million”, noted.

Dimon spoke to Reuters ahead of a groundbreaking ceremony at the bank’s new branch in Southeast Washington, as part of an effort by JPMorgan to promote racial fairness by strengthening its presence in evil communities served.