JPMorgan Chase says banks could fight

JPMorgan Chase CFO Hints at Potential Fight Against Credit Card Price Controls

JPMorgan Chase CFO Jeremy Barnum suggested that the banking industry may resist President Donald Trump’s demand for credit card price controls, stating that “everything’s on the table” in response to the proposal. This comment came during a call with reporters following JPMorgan’s fourth-quarter earnings report, where Barnum emphasized the need to consider all options to protect shareholders’ interests.

The proposal in question involves capping credit card interest rates at 10% for a year, a move that banks and industry insiders argue would lead to a reduction in credit card accounts for Americans and a subsequent decline in spending for the U.S. economy. The average credit card rate nationwide currently stands at 19.7%, according to a weekly survey from Bankrate.com, with rates for subprime borrowers and store-specific cards typically being higher.

Industry Concerns and Potential Consequences

Barnum expressed concerns that such actions would have the opposite effect of what the administration intends for consumers, ultimately reducing the supply of credit and harming both consumers and the wider economy. He also noted that companies might pull accounts rather than offer them at an unprofitable level, should the interest rate limit be implemented.

The enforcement of Trump’s mandate, which has a proposed start date of January 20, remains unclear, as there is no existing U.S. law capping credit card rates. A bill introduced last year by Senators Josh Hawley and Bernie Sanders, aiming to limit card APRs at 10% for five years, is currently stalled in Congress.

Broader Implications and Reactions

Beyond the banking sector, the potential impact of Trump’s rate cap is being felt across industries, including airlines and retailers that rely on revenue from card partnerships. For example, Delta Air Lines reported that its American Express partnership generated $8.2 billion in revenue last year, highlighting the significant role that credit card partnerships play in bolstering profit for such companies.

Delta CEO Ed Bastian voiced concerns that the cap would “upend the whole credit card industry,” questioning how it could be implemented. Similarly, House Speaker Mike Johnson struck a cautious note, emphasizing the need to carefully consider the potential secondary effects of such a policy to avoid unintended consequences.