After the shocking statement that he "sees cockroaches" in the markets, JPMorgan CEO Jamie Dimon did not hide his concern about the rising US government debt and its impact on the bond market, provoking a reaction from Treasury Secretary Scott Bessent. The head of the largest American bank predicted a "crack" in the bond market during his speech at the Reagan National Economic Forum in Simi Valley, California.
"It will happen. And I say this to my regulators, some of you are here, I am telling you it will happen, and you will panic," Dimon declared.
However, Bessent dismissed Dimon's prediction, noting that the JPMorgan CEO has made it in the past without it being validated.
"I've known Jamie for a very long time, and for his entire career he has made such predictions. Fortunately, none of them have come true. That's why he's a banker, a great banker. He tries to see around the corner," Bessent said in an interview with CBS "Face the Nation."
The most influential voice
Dimon emerged in 2025 as an influential voice regarding the policies of the new Trump administration—and as someone who is said to have President Trump's attention. The president even admitted that he had listened to Dimon's advice a few hours before announcing the 90-day suspension of the "Liberation Day" tariffs on April 9.
In the same interview with Fox Business Network, Dimon reiterated his warnings about the bond market, saying that the rising US debt is likely to cause "difficult times" in the market as debt spreads widen. "If people decide that the US dollar is not the right place to be, you could see debt spreads open up. That would be a big problem," Dimon stated.
"It hits those who raise money. That includes small businesses, it includes loans to small businesses, it includes high-yield bonds, it includes leveraged loans, it includes real estate loans. That is why you need to worry about volatility in the bond market," he added.
Long-term US Treasury yields have increased in recent weeks as concerns intensify about the trajectory of US debt, as President Trump's proposed tax legislation moves through Congress, having passed the House of Representatives and now awaiting debate in the Senate.
The legal challenge to the tariffs
New concerns arose last week when a trade court in New York nullified a large part of Trump's tariffs, citing legal issues regarding their implementation method. Although the Federal Court suspended that decision this Thursday, temporarily allowing the tariffs to remain in effect, the legal interplay has added uncertainty to the market.
The Treasury Department's strategies for public debt
Bessent stated in an interview with CBS that the government is working to reduce the deficit.
"The deficit this year will be lower than last year's deficit, and in two years it will be lower again," he said. "We will reduce the deficit gradually. We didn't get here in one year, and this is a process that takes time." Bessent added that the government intends to "leave the country in excellent shape in 2028."
JPMorgan's role in the bond market
One of the strategies that the Trump administration appears to be promoting to mitigate the turmoil in the bond market is to strengthen the role of JPMorgan and other major banks as holders of US Treasury bonds and potentially as dealers.
Bessent has repeatedly mentioned his desire to adjust a bank capital requirement, known as the Supplementary Leverage Ratio (SLR), to facilitate lenders and enhance liquidity in the government bond market. Dimon agrees that modifying the SLR will help the market during periods of stress, while noting that he also wishes to see reforms in various areas of capital requirements.
"The reason we have to change some of these things is so that banks—the major market participants—can intermediate more in the market," Dimon told analysts in April.
"If they do, the spreads will narrow, there will be more active traders," Dimon stated. "If they don't, the Fed will have to intermediate, which I think is bad policy. Every time there is market turmoil, the Fed should not step in and intermediate."
JPMorgan is growing
Nevertheless, JPMorgan dominates the leveraged finance market, writing huge checks that only the largest US bank can issue. Despite discussions around competition between banks and private credit firms, JPMorgan continuously outperforms its competitors with significant financing packages to win debt deals.
The bank led the $8 billion financing for 3G Capital's acquisition of Skechers. Subsequently, it offered $17.5 billion to help Warner Bros. Discovery Inc. split into two parts. However, the most audacious of all deals was the $20 billion check for the acquisition of Electronic Arts Inc., the largest-ever commitment by a single bank for a leveraged buyout. When Egon Durban of Silver Lake Management contacted JPMorgan CEO Jamie Dimon, asking for assurances that the bank had the commitment to pledge the required funds, the deal was closed in just 11 days. The cost for JPMorgan and the banks that later participated in the deal was approximately $500 million.
Competition in confusion
As concerns about cracks in credit markets increase, JPMorgan's willingness to issue large checks has caused a stir among its competitors. The timing is notable, as the bank had restricted high-risk debt financing (leveraged finance) deals in 2022, a move that proved wise as JPMorgan avoided hundreds of millions of dollars in losses suffered by its competitors on large buyouts such as Citrix Systems Inc. and Nielsen Holdings Ltd.
In recent years, private credit firms, such as Ares Management Corp. and Apollo Global Management Inc., have taken on increasingly larger deals. As the balance has tilted from the syndicated loan market to the private credit market and back, the two worlds have alternated roles of friend and foe. This has created a complex and, at times, tense relationship.
The tension recently came to the fore, following two failures that exposed losses for banks and investment firms. Dimon, whose bank suffered a $170 million loss from Tricolor Holdings, used this incident to warn that "there are probably more" cockroaches lurking. Private credit firms took this as a shot at the levels of due diligence in their deals.
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