JPMorgan Prepares for the Worst as U.S. Default Draws Near

JPMorgan Chase is preparing scenario-planning for the possibility of the United States defaulting in the upcoming month.

 

Jamie Dimon, Chief Executive Officer of JPMorgan Chase, the largest bank in the U.S., told Reuters that the firm has begun preparing for the possibility of U.S. credit default, which would affect the money markets in a wide range.

Still, the CEO expected policymakers to find a solution to avoid this “potentially catastrophic” event.

 

The Congress is struggling to get the bill done after the Senate, run by Republicans, blocked the proposed bill, which the Democrats included in a proposition to increase the debt ceiling.

Similar standoffs had happened in the past between the Republicans and Democrats. In 2011 during the Obama administration, the U.S. escaped defaulting in the minute, but resulted in Standard & Poor’s downgrading US government debt, from AAA to AA+, for the first time in history.

Arguments over the ceiling between two political parties also led the U.S. to shutdown non-essential government services in 2013 and 2018 as well.