JP Morgan CEO: "US Default Crisis Will Trigger a Disaster"

Published 29 Sep.2021 08:06(KST)

Jamie Dimon, CEO of JP Morgan [Photo by Reuters]

[Asia Economy Reporter Kim Suhwan] Jamie Dimon, CEO of the global financial group JP Morgan, warned that a default caused by the failure of the US debt ceiling negotiations would "bring disaster."

On the 28th (local time), in an interview with a major foreign media outlet, CEO Jamie Dimon said, "If the US debt ceiling negotiations fail, a disaster could occur," and "(Our bank) has already started preparing for the possibility of the debt ceiling negotiations breaking down."

He continued, "(Our bank) has begun analyzing various factors that could be affected by a default situation, such as repo rates, capital ratios, contracts with clients, the stock market, and responses from credit rating agencies," and urged, "We hope policymakers seek solutions to prevent a default."

CEO Dimon said, "This could be the third time we face a catastrophic situation," adding, "Such a situation should never have happened in the first place."

Previously, the US experienced debt ceiling crises in 2011 and 2017.

The US has legally set the federal debt ceiling at $28.4 trillion. Earlier, the ruling and opposition parties agreed in 2019 to suspend the debt ceiling application until July 31 of this year.

However, as conflicts between the ruling and opposition parties intensified over President Joe Biden's infrastructure development budget bill, they failed to agree on adjusting the debt ceiling. As a result, the debt ceiling was reapplied starting in August.

In particular, on the same day, US Treasury Secretary Janet Yellen urged Congress to pass follow-up legislation to adjust the debt ceiling, warning that the country could face a default on October 18.

CEO Dimon said, "We believe the debt ceiling should be completely eliminated through bipartisan agreement," adding, "Every time this debt crisis occurs, it is barely resolved at the last minute."