Banks wager they can fend off price controls
President Donald Trump’s recent mandate to slash credit card interest rates has sparked a heated confrontation with the biggest U.S. banks. Despite Trump’s directive for banks to offer cards at a 10% interest rate by Jan. 20, executives at JPMorgan Chase and Citigroup have made it clear that they will not comply with this demand.
Citigroup CFO Mark Mason expressed his concerns about an interest rate cap, stating that it would restrict access to credit for those who need it the most and could have a negative impact on the economy. Similarly, JPMorgan CFO Jeremy Barnum indicated that the industry would be prepared to defend itself in court if necessary.
Trump’s push to lower credit card interest rates comes as he seeks to address voter concerns over affordability ahead of the upcoming midterm elections. However, despite the president’s vocal stance on the issue, bankers and lobbyists have not received any formal guidance from the Trump administration regarding the policy.
While Trump has threatened that banks not complying with the rate cap would be “in violation of the law,” there is currently no U.S. law in place capping card rates. A bill introduced last year to cap rates at 10% for five years has not made progress in Congress.
Industry analysts suggest that without legislative action, banks may either find ways to circumvent the rate caps or be forced to make concessions. Drawing parallels to Trump’s dealings with the pharmaceutical industry, analysts predict that the outcome of this battle could result in new pricing commitments but not significant changes.
The financial sector is closely monitoring upcoming Senate meetings where discussions around Trump’s rate cap and interchange fee limits are expected. However, the path forward remains uncertain, with some Republicans already indicating their opposition to price controls on credit cards.
Another key date to watch is next Wednesday, following Trump’s Jan. 20 deadline, when he is set to address leaders at the World Economic Forum in Davos, Switzerland. The event will bring together prominent figures from the corporate and political realms, including Treasury Secretary Scott Bessent and CEOs like JPMorgan’s Jamie Dimon.
Last year, Trump made waves at Davos by accusing Bank of America CEO Brian Moynihan and Jamie Dimon of discrimination against conservatives in access to bank accounts. As the credit card battle unfolds, all eyes will be on how the financial industry and the Trump administration navigate this contentious issue.
