European leaders must address debt sold by nations such as Greece and Spain to avoid a costlier bank bailout, JPMorgan Chase & Co. Chief Executive Jamie Dimon said.

"If they don't fix the problem now, they're still going to have to fix it later by bailing out their banks," Dimon said at the Japan Society's annual awards dinner in New York Monday night. "If they have to bail out their banks, it will be far worse than making that sovereign debt good."

Much of that debt "is owned by European banks, so when these countries have problems, so will their banks," Dimon said, answering a question from former Federal Reserve Chairman Paul Volcker, who is now an economic adviser to President Obama

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