Why JPMorgan CEO Jamie Dimon thinks this debt ceiling fight feels different: Reporter

Brendan Pedersen, author of Punchbowl News' "The Vault", joins Yahoo Finance Live to discuss his interview with JPMorgan Chase CEO Jaime Dimon. He tells viewers what Dimon had to say about the U.S. debt ceiling.

Video transcript

- JPMorgan Chase CEO Jamie Dimon is warning lawmakers about the risks of debt ceiling brinkmanship. In an interview with "Punchbowl News's" "The Vault," Dimon warns about causing panic in the markets, saying, quote, "people panic, and when you see people panic that's '08, '09 again. And that's really what you want to avoid," end quote. Joining us now is the person who conducted that interview, Brendan Pedersen-- Pedersen, excuse me, author of "Punchbowl News's" newest newsletter, "The Vault." Take us through some of the takeaways that you had from your interview with Jamie Dimon.

BRENDAN PEDERSON: Thanks so much for having me. When I spoke with Jamie Dimon, the first thing I asked about was the debt limit because for Congress, that's still the biggest story in town right now. And he was pretty adamant. This does feel a little bit different this time around. The politics are a little bit more pitched.

He said that there is a higher chance that Congress makes a mistake here, whether or not that is allowing a full default of the government's debt or just getting so close that, like you said, markets begin to panic. Obviously there's a lot of political reasons for that. Kevin McCarthy has a much smaller margin of control in the House than John Boehner did during similar episodes in 2011.

And so you have to wonder whether or not he's going to be able to get any kind of debt ceiling raising bill through his chamber that doesn't have all these conservative wish list items, like the Limit Save and Grow Act did, which passed out of the chamber earlier this month. Well, we just have to wait and see.

- Yeah. Brendan, I want to pick up on that point you made about Jamie Dimon saying, look, it's not just about getting past the X-date. It's about the expectation or the risk of even getting to that date. And you talk about the potential mistake in terms of the politics of all this. I want to point to another quote here from your interview with him. On the default itself, he says, "think of it in two pieces, the run up to a default and an actual default. It's even bad to have the run up to default because that can question American debt ratings." I mean, do you get the sense that he thinks that damage has already been done?

BRENDAN PEDERSON: That is a really good question. From him, in particular, I think he would say, no, not yet. I think when you're thinking about stuff like the ratings that American debt gets from Fitch's and Moody's and S&P-- that's Standard and Poor, obviously-- like, we're still triple-A debt right now. But even Fitch's-- I think other ratings agencies have said this too. They are getting more and more concerned about the impact that, simply put, political dysfunction has on the debt limit debate and just the status of American finance, right?

If we got to the point where investors were genuinely concerned that those payments on Treasury's interest would not go, be disseminated out to the rest of the financial system, that is the mother of all liquidity crises, right? We're not there yet. But I think, honestly, if Congress keeps doing this song and dance, I don't blame them, the credit rating agencies, for beginning to wonder just how sustainable this is.

I think that's partly why when President Joe Biden last night started talking about the 14th Amendment a little bit, that line that says the public debt shall not be questioned, that gave markets a little bit of hope, right? Because maybe there's an administrative run around on this. But we're not there yet.

- That's a pretty optimistic outlook, though, right? When you think about what we heard from the president, as well as Leader Kevin McCarthy yesterday, it doesn't feel like there was a whole lot achieved in that discussion. I realized those weren't-- the White House doesn't want to characterize that as negotiations. But "Punchbowl News" obviously right in the center of those negotiations, seeing the back and forth. What's your sense right now about how close we're going to get up to that X-date?

BRENDAN PEDERSON: I mean, we're already pretty close is the thing. I mean, when you're talking about the legislative timetables in place, and if we're talking about a June 1-ish, X-date, obviously there's a little bit of flexibility built into that figure, but we are already at the finish line right now. And so if there are going to be movement, if there's going to be any progress in whether you call it negotiations or whatever, it has to happen really quickly. It has to happen this week.

Thankfully, we do know that staffers from Speaker McCarthy's office and the White House have been meeting today in Speaker McCarthy's office. I just walked over from the lobby outside. Those conversations are happening. We don't exactly know how well they're going. And we're going to have another principals meeting with McCarthy and Biden on Friday.

As soon as that happens, we'll know just how likely a deal is going to be. I think for right now, it's a lot of waiting and wondering, which is probably why markets haven't quite lost their minds. If we get to the point of after this week where there is no deal, I think it's fair to begin to wonder how the markets are going to react and how quickly they might go haywire.

- Yeah, it could be some more choppiness ahead for us. Brandon Pedersen, "Punchbowl News," it's good to have you on today. I appreciate the time.