by Christopher Freeburn | November 19, 2013 8:55 am
If the U.S. government had ran out of money during last month’s political clash between Republicans and Democrats, some of the nation’s leading banks were prepared to handle the fallout.
Contingency planning for a possible U.S. default became a priority for major financial institutions like JPMorgan Chase (JPM), which has spent more than $100 million over the past several years devising strategies to navigate the government’s recurring budget battles. During the most recent crisis, JPM was willing to take over government payments to retail customers dependent on those services, Reuters notes.
CEO Jamie Dimon reportedly approved plans to have the bank provide retail customers with food stamps and Social Security payments if the government shutdown interrupted those payments. The decision met with some internal opposition since it was unclear how the payments would be accounted for — or repaid.
Had JPM carried out the plan, it would have cost the bank an estimated $5 billion a month. According to one source, Dimon called it “the right thing to do.”
JPMorgan Chase is currently facing a number of federal investigations regarding its role in the mortgage securities crisis and its relationship with infamous Wall Street fraud Bernie Madoff.
While the latest government shutdown ended on Oct. 17 with a political compromise, new budget and debt ceiling battles loom in January and February, when the terms of the current agreement expire.
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