JPMorgan CEO calls U.S. downgrade ridiculous but says it doesn’t matter
Jamie Dimon, the CEO of JPMorgan Chase, stated on Wednesday during an interview with CNBC that Fitch Ratings’ recent downgrade of the United States’ long-term credit rating is not significant.
As per Dimon’s statement to CNBC’s Leslie Picker, the borrowing costs are determined by the market rather than rating agencies, so it’s unimportant.
Dimon expressed his view that it is unreasonable for other countries to have higher credit ratings than the U.S. when they rely on the stability that the U.S. and its military provide. According to him, this is absurd.
Dimon expressed his belief that it was absurd for a nation to be considered triple-A but not America. According to him, America remains the most prosperous and secure nation on the planet.
On Tuesday, the country’s rating was downgraded by Fitch from AAA to AA+. The reason behind this decision is the anticipated fiscal deterioration over the next three years, a decrease in governance, and a surge in the general debt burden.
In May, the agency put the U.S. rating on watch due to a conflict between members of Congress over raising the debt ceiling, which almost led to a default by the country.
Dimon has suggested that the debt ceiling should be eliminated as it is causing market uncertainty and is being utilized by both political parties.
During the extensive interview, Dimon covered various topics, such as the state of the American economy, the role of artificial intelligence, geopolitical issues, and regulations in the banking sector.
He spoke highly of technology like ChatGPT, referring to it as a “game changer” that has the potential to improve the quality and length of future generations’ lives.
Dimon expressed concern about the proper execution of the task, emphasizing the importance of doing it correctly. He also acknowledged the potential for malicious individuals to exploit the situation.
Jamie Dimon says the U.S. economy is doing well due to vigorous consumer and business activity, low unemployment rates, and solid financial balance sheets. However, he still sees some potential risks on the horizon, particularly the geopolitical threats posed by the ongoing conflict in Ukraine and the Federal Reserve’s quantitative tightening policies.
Dimon also criticized recent proposals to tighten regulations on U.S. banks, describing them as “hugely disappointing.” He expressed concern that these changes would force banks to hold more capital and limit their ability to offer certain products, which could ultimately hurt consumers. Additionally, he cautioned against relying too heavily on standardized risk models from the Federal Reserve, noting that such models have only sometimes been accurate in the past.