Swonk: JPMorgan and the debt ceiling
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JEREMY HOBSON: Now to the news from the banking sector here in the U.S. this morning. JPMorgan Chase reported a 13 percent rise in profit last quarter thanks to the fees coming in from corporate deals, at least in part.
For more, let's bring in Diane Swonk, chief economist with Mesirow Financial. She's with us live from Chicago as she is every Thursday. Good morning.
DIANE SWONK: Good morning.
HOBSON: So Diane, is this going to be a quarter where banks make profits but don't lend money to consumers?
SWONK: I'm afraid that's the most likely scenario. Banks can make more money lending to corporate clients. And on the other side of it, consumer loans are getting harder for them to make money on and give. We've got a lot of regulations coming down the pike. It's going to make it even harder for consumers to get mortgages that have nothing to do with the banks even in their attempt to deal with the credit situation.
HOBSON: Diane, let me ask you also about the debt ceiling debate that's going on in Washington. There was this warning from Moody's yesterday, the ratings agency, about potentially downgrading the U.S. credit rating if there is no debt limit increase. What do you thinks going to happen here?
SWONK: The clock is ticking. We're now getting to the point where it doesn't look like we're going to get kind of agreement to move forward. But we will have to get an increase in the debt ceiling. That just has to occur. If it doesn't, the costs are going to be enormous to the U.S. economy and we just can't afford that. My fear is that we'll get an increase in the debt ceiling with no movement forward or agreement on how to deal with our own fiscal situation here in the United States. I just hope they can regroup after they do that and figure out how to choose our future rather than let foreigners choose it for us.
HOBSON: Diane Swonk, chief economist with Mesirow Financial, thanks so much.
SWONK: Thank you.