Jamie Dimon, CEO of JPMorgan Chase, participates in a panel discussion on investing in Detroit during a panel discussion at the Kennedy School of Government at Harvard University in Cambridge, Massachusetts, the United States, April 11, 2018. REUTERS / Brian Snyder / File Photo

WASHINGTON, Sept.28 (Reuters) – JPMorgan Chase & Co (JPM.N) has started to prepare for the possibility of the United States reaching its debt limit, chief executive Jamie Dimon told Reuters on Tuesday, adding that ‘He nevertheless expected decision-makers to find a solution to avoid this “potentially catastrophic” event.

The country’s largest lender has started planning scenarios of how a possible U.S. credit default would affect the repo and money markets, customer contracts, its capital ratios and the reaction of rating agencies, Dimon said in an interview.

“It’s like the third time we have to do this, it’s a potentially catastrophic event,” he said.

“Every time that happens it’s fixed, but we should never even get close to it. I just think this is all wrong and one day we should just have a bipartisan bill and get rid of the debt ceiling. It’s all political, “he added.

Congressional Democrats are scrambling to find a way to increase the government’s borrowing limit by $ 28.4 trillion before the Treasury Department runs out of money to service the nation’s debt. Treasury Secretary Janet Yellen said the Treasury would likely exhaust extraordinary measures by October 18. read more

Democrats had hoped to avoid a partial government shutdown and suspend the federal debt ceiling with just one vote. But they were blocked Monday in the Senate by Republicans, who said the two files should be dealt with separately.

Collapsing tax policy has become a regular feature of U.S. politics over the past decade thanks to continued partisan polarization, with debt ceiling deals being suspended in 2011 and 2017.

Dimon said that as part of its preparation, the bank is combing through its customer contracts, a resource-intensive process.

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

RACIAL FAIRNESS

Dimon was speaking to Reuters ahead of a groundbreaking ceremony at the bank’s new branch in southeast Washington, as part of JPMorgan’s efforts to promote racial equity by strengthening its presence in underserved communities.

The branch is the eleventh of its kind JPMorgan has opened in cities such as New York, Detroit, Los Angeles and Chicago, since 2019. In addition to providing traditional services, the branches work with local community groups to provide free training and education. ‘other small business support.

“It’s not a traditional bank branch, we want it to be very welcoming, we want it to be attractive,” Dimon said.

Following the nationwide “Black Lives Matter” protests last year, JPMorgan pledged $ 30 billion over five years to advance racial equity. This includes the provision of 40,000 new mortgages and 15,000 small business loans to Black and Latino communities.

The investment highlights the extent to which large companies are increasingly embracing social, environmental and governance or ESG issues under pressure from investors.

Tackling racial equity is also a priority for the administration of President Joe Biden, who has said that the “deserts” of bank branches perpetuate inequality by reducing access to credit.

Biden’s Acting Currency Comptroller Michael Hsu said this month he would drop contentious changes to fair loan laws led by his Trump-appointed predecessor and begin a new review with other banking regulators .

The rules around the Community Reinvestment Act, where regulators rate banks on how they serve poor communities, need to be regularly modernized to take into account technological changes in the banking sector, said Dimon, who said the law overall is good for the country.

“It’s very complicated, very slow, very late, very difficult to measure,” he said, adding that ARC assessments should also be done in real time, as opposed to looking back every time. a few years.

“Does it actually capture everything? No. Is it in real time? No. Is it politicized? Absolutely.”

Reporting by Pete Schroeder, editing by Nick Zieminski

Our Standards: Thomson Reuters Trust Principles.


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