Jamie Dimon warns a US default would be 'potentially catastrophic' as lawmakers remain deadlocked over raising the debt ceiling

• The US defaulting on its debt is "potentially catastrophic," JPMorgan Chase chief Jamie Dimon told Bloomberg on Thursday. 
• A June 1 deadline is approaching for President Joe Biden and Republican leaders to raise the $31 trillion debt limit. 
• "People should remember the American financial is the foundation to the global economic system," Dimon said. 

JPMorgan Chase CEO Jamie Dimon on Thursday warned of unprecedented economic harm if the US defaults on its debt amid a failure by lawmakers to raise the country's debt ceiling. 

A default "is potentially catastrophic," Dimon told Bloomberg TV in an interview at the bank's Global Markets Conference in Paris. 

There's a  June 1 deadline to raise the country's $31 trillion borrowing limit. The government could run out of money to pay its bills if the ceiling is not lifted, says Treasury Secretary Janet Yellen. 

Dimon doesn't expect the country to experience its first-ever debt default, but the clock on reaching a deal is running down.  

"The closer you get to it, you will have panic … Markets will get volatile, maybe the stock market will go down, the Treasury markets will have their own problems," said Dimon, whose bank earlier this month bought the assets of failed First Republic.

President Joe Biden on Wednesday met with lawmakers including Speaker of the House Kevin McCarthy, to discuss raising the debt ceiling but with Republicans seeking spending cuts and other terms, no agreement was reached.

A showdown in Congress in 2011 over the debt limit resulted in the US losing its Triple-A credit rating at S&P. 

Contracts, collateral, clearing houses and global clients would be hurt by a default, said Dimon, adding that time-consuming "war room" talks are underway. 

Talks are currently taking place once a week.

"But my guess is sometime - call it May 21 - it'll be every day. And then it'll be three times a day. And then there will be more conversations with clients about what they need to do, to help get them through it. It's very unfortunate. It should never happen this way." 

Yields on short-term Treasury bills have spiked up as investors sell that debt to prepare for a potential default.

"It's amazing you already have certain T-bills trading at 3% and right next them 5%. This is not good," Dimon said. "People should remember the American financial is the foundation to the global economic system." 

The one-month Treasury yield was at 5.55% on Thursday and the 3-month Treasury yield was at 5.2%. 

"The last time we were downgraded, we had a 65% or 70% debt to GDP [ratio]. Now it's 105. Now our deficits are two or three times that that we had back then, so we better be very careful," said Dimon.

A "default is not an option," Biden said he told Congressional leaders at Wednesday's meeting. "America is not a deadbeat nation. We pay our bills," he said.