JP Morgan Chase CEO, Dimon: Failure to address US debt limits in time would be ''potentially catastrophic''
JP Morgan Chase has begun preparing for potential US credit default as debt limit talks go to wire, CEO Jamie Dimon said according to Reuters.
Dimon says he expects policymakers will address the debt limits in time; cautions failure to do so would be ''potentially catastrophic''.
Dimon says would support a bipartisan bill to get rid of the US debt ceiling.
His comments follow yesterday's news whereby Republican Senators blocked the bill that would have suspended the debt ceiling until December 2022 and funded the government past September 30.
The 48-50 outcome was not a surprise as Majority Leader Schumer switched his vote to no at the last moment in order to retain the option of calling for another vote on the bill later.
60 votes were needed and so the Democrats are left with few options.
Analysts at Brown Brothers Harriman expected that the most likely option is that the debt ceiling is folded into the human infrastructure package that the Democrats plan to pass by the budget reconciliation process requiring no Republican support.
''And yet even this is highly precarious, as centrist Democrats are threatening to withhold support unless the $3.5 trln price tag is reduced. Stay tuned.''
Market implications
This is likely playing into the risk-off sentiment with US equities sharply lower on the day.
The S&P 500 and the Nasdaq headed for their worst day in four months. At 17.48 GMT, the Dow Jones Industrial Average was down 544 points, or 1.57%. The S&P 500 was down 86.40 points or 1.94% and the Nasdaq Composite was down 403 points, or 2.65%.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
