Jamie Dimon Reportedly Warns US Debt Default Could Cause Financial Panic

Benzinga · 05/11/2023 01:30

JPMorgan Chase & Co (NYSE:JPM) CEO Jamie Dimon reportedly said the congressional impasse over the U.S. debt ceiling and a potential default on the national debt could create a financial panic.

"Panic isn't necessarily a rational thing," Dimon said during an interview with Punchbowl News, according to a Reuters report. "People panic. And (when) you see people panic — that's ‘08, ‘09 again, and that's really what you want to avoid," he said.

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The veteran banker said there's a higher chance of a mistake because of the politics of the situation and that could have damaging economic consequences. "I hope, one day, we get rid of it," he said, reiterating a call to do away with the debt limit permanently.

Next Meeting: President Joe Biden and House Speaker Kevin McCarthy are scheduled to meet again on Friday regarding the debt ceiling crisis after they failed to reach a consensus on Tuesday. Biden has urged Republicans to move quickly with the debt ceiling or risk pushing the economy into a recession that would take away thousands of jobs.

“This is no time to put all this at risk, to threaten a recession, to undermine America’s standing in the world. Republican threats are dangerous and they make no sense,” he said, according to a Reuters report.

Although markets seem to have taken a sigh of relief from the inflation data that came in lower than expected, the debt ceiling stand-off could lead to bouts of volatility in the days running up to June 1 when the Treasury is expected to run out of cash unless the debt ceiling is either suspended or raised. The SPDR S&P 500 ETF Trust (NYSE:SPY) closed 0.47% higher on Wednesday while the Invesco QQQ Trust Series 1 (NASDAQ:QQQ) gained 1.09%.

Meanwhile, former president Donald Trump on Wednesday urged Republican lawmakers to let the United States default on its national debt if Democrats don't reach a consensus on spending cuts.

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