JPMorgan Chase chief executive Jamie Dimon said he remains optimistic about a U.S. economic recovery, provided the country doesn’t toy with a default this summer.
“It would be immoral for the U.S. to stop paying its debts,” Dimon said Thursday evening in an interview before a scholarship dinner for the University of Colorado Denver Business School. “The U.S. is the foundation of the financial system of the world.”
Congress has until Aug. 2 to raise the nation’s debt ceiling so the U.S. Treasury Department can keep borrowing.
“When you are two or three weeks out, you will see terrible things happen,” he said. “I wouldn’t wait too long if I were some of these politicians.”
The bank has studied a long list of problems that could develop, including money market funds losing money, the intraday payment system bogging down and Treasury yields seeing a huge spike.
“When I say worse, think of a Lehman times 10,” he said of the investment bank whose failure put the nation on the brink of financial ruin in September 2008.
Dimon said the country needs to show discipline in tackling its debts, but pushing the country to the deadline will be dangerous.
“Just do the right thing and find a way to bring the deficits under control,” he urged.
Dimon visited Denver for the 2011 Celebration of Success held at the Grand Hyatt Denver downtown.
JPMorgan Chase ranks as the nation’s largest bank, with $2.2 trillion in assets and operations in 60 countries. The company’s subsidiary Chase Bank is Colorado’s third-largest institution in deposits.
Dimon said the bank’s loans to middle-market companies are growing about 13 percent a year, and large corporate clients are as healthy as they have been in decades.
Those corporate customers have reduced their borrowing with the bank from $130 billion before the crisis to $100 billion. Their deposits, in contrast, have grown from $100 billion to $160 billion.
Housing is a different story, reflected in a $1.1 billion charge JPMorgan took in the first quarter on its mortgage business.
Dimon said he estimates that the country is about two-thirds of the way through the housing slump and that foreclosures are close to peaking.
Until then, home prices will continue to slump, but he predicts household formations will soon bring supply and demand into balance.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
Jamie Dimon
Title: CEO and chairman of JPMorgan Chase & Co., a bank with operations in 60 countries and $2.2 trillion in assets.
Born: March 13, 1956, in New York
Education: Bachelor’s degree from Tufts University; MBA from Harvard Business School
Previous executive experience: American Express, Commercial Credit Co., Travelers Group, Smith Barney, Citigroup, Bank One
Career: Named chief operating officer and president of JPMorgan on July 1, 2004, after the bank completed its purchase of Bank One; became CEO at the start of 2006 and chairman a year later.
Nonprofit involvement: Federal Reserve Bank of New York, The Clearing House, the United Negro College Fund, Harvard Business School, the Business Council, Business Roundtable, the Partnership for New York City, Financial Services Forum, Financial Services Roundtable and Council on Foreign Relations.
Source: JPMorgan Chase
