There are storm clouds ahead for the economy, JPMorgan Chase CEO says

New York (CNN) JPMorgan Chase & Co. Chief Executive Jamie Dimon said in an exclusive interview with CNN Thursday that the banking crisis triggered by the recent failures of Silicon Valley Bank and Signature Bank could lead to a US recession. said to be on the rise.

In his first interview since the SVB bankruptcy, Dimon said that while the banking system was strong and healthy, the recent turmoil surrounding the financial system was “another weight on the scale” heading into recession. said.

“We’re seeing people lending a little less, a little less, a little bit back.” Bank turmoil doesn’t “necessarily force a recession,” he said, but “it’s a recession.”

Dimon said dark clouds were looming over the economy. In addition to the Fed’s current tightening regime, he sees higher and persistent inflation and Russia’s war with Ukraine as the biggest risks to the economy. But Dimon said he sees hope in the strength of America’s human capital.

On supporting local entrepreneurship, Dimon said, “I’m a red-blooded, thirsty, free-market, free-enterprise financier.” I think we should sing the merits out of the hills while fixing the downsides instead of doing.”

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After launching Chase’s Atlanta community branch, imon spoke with Harlow. The Bank of Atlanta is his 16th branch of Chase, built in partnership with the community, and hosts free events, financial health workshops, and skills training for local residents. The community branch also provides storefront space for small business pop-ups.

community banking

According to Dimon, these chapters are not charitable organizations in any way. they are good for business. “We need to put money in the community,” he said. Part of it is as easy as opening a savings account. “Many of us had moms and dads who took us to open our first account,” he said. You can see it turned into a dollar. It was like magic. Interest on that.”

Dimon said that’s part of what he wants to achieve with his community branch.

“Don’t be afraid to step into a branch here. Bring your kids and feel free to come,” he said.

As part of this initiative, Chase has hired a number of community managers. Its express purpose is to encourage people new to the banking environment to come to the bank and learn about their finances.

This role is essential and is often taken up by medium-sized community banks in the region, which is one reason why the recent failures and potential contagion of SVB and Signature are so dire.

Banking sector meltdown

Dimon said it remains to be seen whether the U.S. economy is past the bottom of the current banking crisis.

“I hope it will be resolved soon,” he said.

Dimon said he wasn’t sure if more banks would go bankrupt this year, but was quick to point out that the turmoil was very different from the 2008 financial crisis. lots of leverage. we don’t have that ”

There are no big problems in the mortgage market either, he added. “This is nothing like that, and the American public shouldn’t think about it.”

Still, Dimon said he wouldn’t mind if some banks failed. “It’s okay to fail,” he said. “You just don’t want this domino effect.”

Dimon warned that local banks and American consumers “need to prepare for higher prices.” [interest] longer charges. I don’t know if it will happen, but be prepared for that tide. ”

He said interest rates could well stay high for longer and banks investing in government bonds should prepare for that possibility.

debt ceiling pain

Lawmakers have become increasingly concerned about raising the debt ceiling, the $31.38 trillion self-imposed borrowing limit in January. Barring new legislation, a default by the US government could occur this summer or early September, according to various analyzes.

But negotiations between House Republicans and the White House remain deadlocked.

Dimon, who has worked closely with the White House and Congress on various economic issues this year, told Harlow that there will be no defaults under his oversight. I will keep fighting,” he said.

Dimon said he believes Congress will reach a resolution on the debt ceiling within the next few months, but said there could be more economic pain before a deal is reached.

“You’ll be in pain before it happens,” he said of breaking the debt ceiling. ” he said.

Still, “when I go to Washington, most people there know how serious this is and want it resolved.”

Trump’s 2024 campaign

Dimon serves on former President Donald Trump’s economic council, and while he doesn’t believe the Trump indictments and criminal charges facing the former president this week will affect the economy, it’s important to note that he believes Trump will be making some good economic decisions. I believe that we have established a policy.

“There are good policies he’s done,” Dimon told Harlow. unemployment was at an all-time low.”

It’s not an endorsement, he quickly added. “That’s not endorsing him, just saying it’s true.”

Dimon also commented on Florida Governor Ron DeSantis, the 2024 Republican presidential nominee.

Florida last year passed a bill restricting discussion of LGBTQ issues in Florida schools. Disney challenged the law, and the state of Florida subsequently took steps to strip some of the power Disney had over land that included or surrounded Disney World.

These actions prompted Disney CEO Bob Iger to call DeSantis’ actions and laws “anti-business.”

Dimon said Thursday that “we actively and proactively support the LGBT community,” confirming he will continue to do so despite DeSantis.

read the full transcript here.