NEW YORK ( TheStreet) - JPMorgan Chase (JPM - Get Report) CEO Jamie Dimon sent more shivers through the municipal bond markets this week, indicating that more troubled cities may default on their debts.
"There have been six or seven municipal bankruptcies already," Dimon said on Tuesday at an annual health-care conference sponsored by JPMorgan in San Francisco. "I think unfortunately you will see more."
He added that: "If you are an investor in municipals you should be very, very careful."
Fears have risen in recent months about defaults in the municipal-bond market, as states, cities and towns face huge budget gaps. Unemployment and the economic slowdown have left them with less tax revenue, forcing big cuts in service or tax hikes to make ends meet. California, New Jersey and Illinois are among the states with big budget issues, while Harrisburg, Penn., and Detroit are among the troubled cities. Lots of cities are expected to be unable to meet obligations if they can't tighten their belts within the next few months.Dimon isn't the first financial big-wig to cite concern about the municipal bond market. But as head of one of the largest banks in the country warning about additional defaults, his comments carry weight. -- Written by Lauren Tara LaCapra in New York.
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