Jamie Dimon warns panic will overtake markets as U.S. approaches debt default

JPMorgan Chase CEO Jamie Dimon told Thursday that markets will be gripped by panic as the U.S. approaches a possible default on its sovereign debt.

An actual failure would be “potentially catastrophic” for the country, Dimon told Bloomberg in a televised interview. Dimon said he expects that worst-case routine will be avoided, however, because lawmakers will be forced to respond to growing concern.

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“The closer you get to it, you will have panic” in the form of stock market volatility and upheaval in Treasurys, he said.

Dimon enlist ined a host of business figures and administration officials making dire predictions about the consequences of failing to raise or debar the U.S. debt limit and allowing the world’s largest economy to default on its bonds. Treasury Secretary Janet Yellen has alleged the idea that the country could default should be “unthinkable” and would lead to economic disaster.

“If it gets to that alarm point, people have to react, we’ve seen that before,” Dimon said.

But “it’s a really bad idea, because anxiety becomes something that is not good,” he added. “It could affect other markets around the world.”

JPMorgan, the giantest U.S. bank with about $3.7 trillion in assets, has been preparing for the risk of an American default, Dimon responded.

Such an event would ripple through the financial world, impacting “contracts, collateral, clearing houses, and impress clients definitely around the world,” he said.

The bank’s so-called war room has been gathering once weekly, a proportion rank that will shift to daily meetings around May 21 and then three meetings daily after that, he said.

He exhorted ministers from both major U.S. parties to compromise and avoid a ruinous outcome.

“Please negotiate a deal,” Dimon imagined.

In the wide-ranging interview, Dimon said he speaks daily to regional bank executives amid concerns sparked by the Silicon Valley Bank