JPMorgan Chase says banks could fight
JPMorgan Chase CFO Jeremy Barnum said Tuesday that “everything is on the table,” hinting that the industry could fight President Donald Trump’s demand for credit card price controls.
“If you encounter poorly supported and unjustified directives to fundamentally change our business, you have to assume everything is on the table,” Barnum said in a call with reporters following JPMorgan’s fourth-quarter earnings report. “We owe it to the shareholders.”
Barnum responded to a question about whether banks would choose to sue to block Trump’s request late Friday that card companies cap interest rates at 10% for a year. Last year, the industry successfully fought the Consumer Financial Protection Bureau’s efforts to cap card late fees.
Banks and industry insiders say the interest rate cap would lead to fewer credit card accounts for Americans and a decline in spending for the U.S. economy because companies would rather withdraw accounts than offer them at an unprofitable level.
The average credit card rate nationwide is 19.7% as of this month, according to a weekly report. questionnaire From Bankrate.com, rates are generally higher for subprime borrowers and store-specific cards.
“We believe actions like this will lead to results that are exactly the opposite of what the administration wants for consumers,” Barnum said. “Instead of reducing the price of credit, we will reduce the supply of credit, and that will be bad for everyone: consumers, the wider economy and, yes, marginally, for us.”
The CFO declined to directly answer a question about whether JPMorgan would comply with Trump’s request, which has a Jan. 20 start date. Trump says banks that don’t comply with directive are ‘violating the law’ said Journalists on Sunday.
However, it is not yet clear how Trump’s order will be implemented. There is no U.S. law capping card rates, although a bill was introduced last year by Sen. Josh Hawley of Missouri and Sen. Bernie Sanders of Vermont to cap card APRs at 10% for five years. This bill remained pending in Congress.
Other voices in the corporate and political spheres began addressing the potential impact of Trump’s interest rate cap on Tuesday.
Beyond banks, airlines and retailers also rely on revenue from card partnerships to increase their profits. For example, Delta Airlines he said on tuesday American Express The partnership generated $8.2 billion in revenue last year.
Delta CEO Ed Bastian said on the earnings call that the cap would “disrupt the entire credit card industry… I don’t see a way for us to even begin to think about how to implement this.”
House Speaker Mike Johnson made the warning when asked about the issue at a press conference.
“We have a lot of work to do [on] “There’s consensus on this, but you have to be very careful as we go down this path in our effort to reduce costs; you don’t want to have negative knock-on effects,” Johnson said.
— CNBC’s Emily Wilkins and Leslie Josephs contributed to this report.
