New York — Until this week, Wall Street had generally benefited from the Trump administration’s policies and been supportive of the president. That relationship suddenly became strained.
When President Donald Trump They signed the big, beautiful bill into law In July, she pushed through another big round of tax cuts and cut the budget of the Consumer Financial Protection Bureau, sometimes considered an enemy of the banking industry, by nearly half. Bank regulators during the Trump era were also pushing the deregulation agenda adopted by banks and major corporations.
But now the president proposed one year, 10%. Interest rate cap on credit cardsIt is a profitable business for many financial institutions, and its Ministry of Justice has done so The investigation began with Federal Reserve Chairman Jerome Powell This is what many say threatens the institution that is supposed to set interest rates without political interference.
Bank CEOs warned the White House on Tuesday that Trump’s actions would do more harm than good to the US economy.
Robin Vince, CEO of the Bank of New York, told reporters that pursuing Fed independence “doesn’t seem to us to achieve the administration’s core goals of things like affordability, lowering the cost of borrowing, lowering the cost of mortgages, lowering the cost of everyday life for Americans.”
“Let’s not shake the foundations of the bond market and maybe do something that might actually raise interest rates, because somehow there’s a lack of confidence in the independence of the Fed,” Vince added.
The Fed’s independence is sacrosanct among the big banks. While the banks may have wanted Powell and other Fed policymakers to somehow move interest rates more quickly, they generally understood why Powell did what he did.
“I don’t agree with everything the Fed has done. I have great respect for Jay Powell, the man,” JPMorgan Chase CEO Jamie Dimon told reporters on Tuesday.
Besides attacks on the Fed, President Trump is going after the credit card industry. With affordability likely to be a major issue in this year’s midterm elections, Trump wants to cut costs for consumers, he says He wants a 10% cap on credit card interest rates It is unclear whether he hopes to achieve this by pressuring the credit card industry to cap interest rates voluntarily, or through some type of executive action.
The average interest rate on credit cards ranges between 19.65% and 21.5%, according to the Federal Reserve and other industry tracking sources. The 10% cap is likely to cost banks nearly as much $100 billion in lost revenue Annually, researchers at Vanderbilt University found. Shares of credit card companies such as American Express, JPMorgan, Citigroup, Capital One and others fell sharply on Monday as investors worried about the potential earnings hit these banks could face if an interest rate cap is implemented.
In a call with reporters, Jeffrey Barnum, Chief Financial Officer of JPMorgan, indicated that the industry is prepared to fight with all the resources at its disposal to prevent the Trump administration from setting a ceiling on those rates.
“Our belief is that such actions would be completely counterproductive to what the administration wants in terms of helping consumers,” Barnum said. “Instead of reducing the price of credit, it would simply reduce the supply of credit, and that would be bad for everyone: consumers, the broader economy, and for us.”
Trump appears to have doubled down on his attacks on the credit card industry overnight. In a post on his social media platform Truth Social, he said he supported a bill introduced by Sen. Roger Marshall, R-Kansas, that would potentially cut the revenue banks earn from merchants when they accept a credit card at the point of sale.
“Everyone should support the Credit Card Competition Act authored by the great Republican Senator Roger Marshall to stop the out of control debit fee scam,” Trump wrote.
The comments from Wall Street come as major banks announce their quarterly results. JP Morganthe nation’s largest consumer and investment bank, and Bank of New York Mellon Corp., one of the world’s largest custodian banks, announced their results Tuesday with Citigroup, Bank of America, Wells Fargo and others to report later this week.