JPMorgan CEO Jamie Dimon: U.S. Debt Default Would Be A 'Moral Disaster'
(AP) DENVER -- It would be a "moral disaster" if the United States were to default on its debts and become unable to pay its obligations, JPMorgan Chase & Co. CEO Jamie Dimon said at an appearance in Colorado Thursday evening.
The U.S. is the financial linchpin of the world, and the economic effects of the U.S. defaulting could be "potentially catastrophic," he said at a dinner for the University of Colorado Denver Business School.
"It will dwarf Lehman," Dimon said, referring to the 2008 collapse of the investment bank Lehman Brothers, which contributed to the beginning of a global financial crisis.
Dimon's comments came in response to a question about the federal deficit from moderator Tom Petrie, a vice chairman of Bank of America Merrill Lynch.
Congress is debating raising the country's $14.3 trillion borrowing limit. White House officials say the government will run out of cash to pay expenses Aug. 2, but lawmakers have said they want spending cuts before they agree to raise the debt ceiling.
Dimon got a standing ovation at the dinner, a marked contrast to JPMorgan's annual meeting in Ohio on Tuesday, when more than 400 demonstrators shouted outside. The protests were organized by a coalition of clergy and unions, which is pushing for action and legislation around banking practices that hurt troubled homeowners.
Along with all the major banks in the country, JPMorgan Chase has been criticized for its handling of mortgage foreclosures.
After Petrie noted The New York Times recently called him America's least hated banker, Dimon quipped he never expected to be in a business where he'd be on the receiving end of so much anger.
"Our people work hard, they give a damn, they help their communities," he said.
During the crisis, JPMorgan Chase bought Bear Stearns Cos. and what was left of Washington Mutual Inc. after it failed. It also accepted aid from the federal government's Troubled Asset Relief Program, even though it didn't need to, Dimon said.
Dimon has said government officials told him that taking the aid would boost the health of the financial system and reduce the stigma of only a few banks accepting aid. At the time, Dimon called TARP money a scarlet letter.
Once JPMorgan repaid the aid, Dimon said he was tempted to include a note to Treasury Secretary Timothy Geithner that said, "P.S. During the whole time you were lending us $25 billion, we were loaning you $200 billion" in the form of Treasury instruments the company holds.
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First Posted: 05/20/11 04:26 PM ET Updated: 07/20/11 06:12 AM ET