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 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.
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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.
[Associated
Press; By CATHERINE TSAI]
Copyright 2011 The Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or
redistributed.
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