Wall Street executives urged President Donald Trump on Tuesday to stop attacking the Federal Reserve and the credit card industry, days after the administration proposed a one-year 10% cap on credit card interest rates.
The tension surfaced publicly as major banks reported quarterly results. JPMorgan and the Bank of New York Mellon both reported their results Tuesday, while Citigroup, Bank of America and Wells Fargo were scheduled to report later this week.
The latest confrontation centers on two linked initiatives discussed in the administration’s public push on affordability and borrowing costs. Trump’s proposals include the credit card rate cap, and the article also said the Department of Justice has launched an investigation into Federal Reserve Chair Jerome Powell, a move critics said threatens the institution’s independence from political interference.
Trump proposed the credit card cap as a way to lower consumer costs, and he said it is aimed to be in place by Jan. 20. The article said the average credit card interest rate is between 19.65% and 21.5%, citing the Federal Reserve and other industry tracking sources.
Wall Street executives warned that the cap would backfire. In a call with reporters, JPMorgan CFO Jeffrey Barnum indicated the industry was willing to fight “with all resources at its disposal” to stop the administration from capping those rates, and he said the industry expects the policy to have “the exact opposite consequence” to the administration’s goals—reducing the supply of credit instead of lowering prices for consumers.
Robin Vince, the chief executive of BNY Mellon, told reporters that going after the Fed’s independence “doesn’t seem, to us, to be accomplishing the administration’s primary objectives for things like affordability, reducing the cost of borrowing, reducing the cost of mortgages, reducing the cost of everyday living for Americans,” according to the report. Vince added that the focus should not “shake the foundation of the bond market” in a way that could push interest rates higher by undermining confidence in Fed independence.
JPMorgan CEO Jamie Dimon also weighed in on the Fed dispute, the article said. Dimon told reporters Tuesday that he doesn’t agree with everything the Fed has done, but he said he has “enormous respect for Jay Powell, the man.”
In response, the article said Trump did not soften his criticism of the Fed. Trump told journalists Tuesday that it was “fine what I’m doing” and called Powell “a bad Fed person” who has “done a bad job,” after returning from a day trip to Michigan at Joint Base Andrews.
On credit cards, the article said the proposed cap is likely to be costly to banks. It reported that Vanderbilt University researchers found such a cap would likely cost banks roughly $100 billion in lost revenue per year, and it said investors moved sharply against credit card issuers after the proposal surfaced.
Barnum said that reducing the supply of credit would harm consumers and the broader economy, while also affecting the banks themselves. The report also noted that JPMorgan is one of the biggest credit card issuers, with customers collectively holding $239.4 billion in credit card balances, and it said JPMorgan has co-brand partnerships with United Airlines and Amazon. The article said JPMorgan also recently acquired the Apple Card credit card portfolio from Goldman Sachs.
Even companies that partner with banks on co-branded cards expressed concerns. Delta Air Lines CEO Ed Bastion told analysts Tuesday that a cap would restrict the lower end of consumers from accessing credit, “not just what the interest rate they’re paying,” according to the report, and said that would “upend the whole credit card industry.”
The article said Trump also escalated his push on the credit card industry through a post on Truth Social, endorsing a bill introduced by Sen. Roger Marshall, R-Kansas, that he described as designed to cut into the revenue banks earn from merchants at point-of-sale when they accept credit cards.
Trump told reporters Tuesday that he was not going to back down on the credit card interest rate issue, the article said. He added that “Jamie Dimon probably wants higher rates,” and suggested “maybe he makes more money that way.”