Jamie Dimon says JPMorgan is preparing for the US to default on its debt, warning that such a scenario would be ‘potentially catastrophic’

• Jamie Dimon said JPMorgan had started preparing for the possibility the US will default on its debt.
• He said the scenario was “potentially catastrophic” and he hoped legislators would solve the crisis.
• “Every single time this comes up, it gets fixed, but we should never even get this close,” he said.
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Jamie Dimon, the president and CEO of JPMorgan Chase, said his bank had started preparing for the possibility of the US defaulting on its debt – a scenario he described as “potentially catastrophic” – but added that he hoped legislators would find a way to solve the crisis.

“This is like the third time we’ve had to do this. It is a potentially catastrophic event,” Dimon told Reuters before a ribbon-cutting ceremony in Washington at one of his bank’s newest locations.

The executive told Reuters such an outcome would influence repurchase agreement and money markets, as well as affect how rating agencies react. His bank has also begun looking through client contracts, a process that requires significant resources.

“You’ve got to check the contracts to try to predict it out. … If I remember correctly, the last time we got prepared for this, it cost us $100 million,” he said.

Dimon said he would support a bipartisan bill to eliminate the debt ceiling altogether.

“Every single time this comes up, it gets fixed, but we should never even get this close,” he said. “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.”

Senate Republicans Monday night struck down a bill that passed the House that would have raised the debt ceiling and prevented a government shutdown.

Democrats, meanwhile, are rushing to raise the government’s $28.4 trillion borrowing limit. They have until October 18 to do so.

Treasury Secretary Janet Yellen, who reiterated her call for bipartisanship, told lawmakers she would try to exhaust extraordinary measures if Congress didn’t act to raise or suspend the debt limit by that date.

While analyst consensus indicates confidence the crisis will be averted, some, including Chris Zaccarelli, the chief investment officer at Independent Advisor Alliance, have expressed concern.

“Most likely the Congress will either raise the debt ceiling before the end of the week or the Federal Reserve could step in and use extraordinary measures,” he said via email. “Still, it’s a sign of the dysfunctional times that Republicans won’t go along with Democrats in passing a debt ceiling increase.”

The debt ceiling has been a point of contention between both parties since it was introduced in 1917 to encourage the government to slow its borrowing.