Banks only have questions and no answers like Trump

NEW YORK (AP) — A week ago, President Donald Trump told the credit card industry that he had until Jan. 20 to meet his demand for a 10% cap on interest rates. With just days to go, consumer groups, politicians and bankers remain unclear what the White House has planned and whether Trump is even serious about the idea.

So far, the White House has not provided any details about what will happen to credit card companies that do not reduce card rates. White House press secretary Karoline Leavitt said the president has “the expectation” that credit card companies will agree to his demand to cap credit card interest rates at 10%.

“I don’t have a specific consequence to outline for you, but certainly this is an expectation and, frankly, a demand that the president has made,” he said Friday.

A researcher who studied Trump’s proposal when Trump first introduced it during the 2024 presidential campaign found that Americans would save about $100 billion in interest annually if credit card rates were capped at 10%. The same researchers found that while the credit card industry would take a major hit, it would still be profitable, although credit card rewards and other benefits could be reduced. The administration has expanded on that investigation and posted it on one of the official White House Twitter pages.

Banking lobbyists, many of whom have spent much of the past week scrambling to figure out what the White House has planned for their industry, have been left in the dark. Both Republicans and Democrats have introduced bills in both chambers of Congress this year and in previous years, but Republican leaders in the House and Senate have been cool to the idea of ​​passing legislation capping interest rates.

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The Dodd-Frank Act, passed after the 2008 financial crisis reshaped the financial industry, explicitly prohibits at least one federal banking regulator from setting usury limits on lending.

Without a law or executive order, it could simply come down to Trump using political pressure to force the credit card industry to do what he wants, as he has done with other industries. For example, Trump demanded that pharmaceutical companies lower drug prices, which resulted in some pharmaceutical industry CEOs agreeing to do as he asked. Trump also demanded that chipmakers and technology companies move production to the United States, which also resulted in companies like Apple pledging to develop more manufacturing capacity domestically.

Wall Street has little interest in an all-out war with the White House, especially since banks have benefited from the industry-friendly deregulatory agenda the Trump administration has provided so far. The One Big Beautiful bill, signed into law in July, spurred another significant round of tax cuts. And deregulation pushed companies to adopt agreements last year, leading to a steady flow of income and fees from investment banking to big banks.

When it comes to credit card rates, the message from banking lobbyists and bank executives has been twofold: They have rejected the cap but at the same time offered to work with the White House.

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In a call with reporters on Tuesday, JPMorgan Chief Financial Officer Jeffrey Barnum indicated that the industry was willing to fight with all the resources at its disposal to prevent the Trump administration from capping those rates. JPMorgan is one of the largest credit card companies in the country. Its clients collectively have $239.4 billion in balances with the bank and it has significant co-branding partnerships with companies such as United Airlines and Amazon. JPMorgan also recently acquired Goldman Sachs’ Apple Card credit card portfolio.

Mark Mason, Citigroup’s chief financial officer, told reporters Wednesday that a cap “is not something we could or would support,” saying it would restrict credit to consumers and hurt the economy. But at the same time, Mason said, “affordability is a big issue and we look forward to working with the administration to find ways to address it.”

Trump further targeted the card industry when he backed a bill in Congress that could negatively impact the amount of money banks earn from merchants every time a customer swipes their card.

Not all companies are waiting for Trump’s next move.

Financial technology company Bilt launched a new set of credit cards this week and said it would cap customer interest rates at 10% on new purchases for a year. While it is effectively a promotional rate that other credit card companies have used in the past, Bilt’s move could provide an example of how the credit card industry can meet the White House’s demands without fundamentally destroying its business model.

“If (a credit card rate cap) is going to be implemented, we would prefer to be at the forefront,” Ankur Jain, Bilt’s chief executive, said in an interview earlier this week.