JPMorgan Chase CEO Jamie Dimon has cautioned that U.S. President Donald Trump’s proposal to cap credit card interest rates would be an ‘economic disaster’. Trump is urging Congress to approve the move, aiming to address voters’ cost-of-living concerns. Dimon, head of JPMorgan Chase, a global financial services firm, stated the cap would cut off credit for a large portion of Americans, who rely on it as a backup.
Trump reiterated his call for a 10% interest rate cap at the World Economic Forum in Davos, citing high profit margins for credit card companies. However, banking industry bodies are strongly opposing the measure, arguing it would restrict credit access for consumers. Wall Street analysts also believe the proposal faces slim odds of passage due to divisions in Congress.
Dimon suggested testing the cap in specific states before broader implementation. He also warned of broader economic consequences, affecting retailers, travel companies, and municipalities if consumers face credit constraints. Trump’s initial call for companies to comply by January 20 sent bank stocks tumbling. However, analysts note that the President is asking Congress to pass legislation, making it unlikely a 10% cap will be put in place anytime soon.
Dimon indicated that major Wall Street banks are preparing to provide real analysis on the potential effects of the rate cap, after stating that they’ve given some but not a lot. Other banking executives, including Citigroup CEO Jane Fraser, expressed doubt that Congress would approve such caps. Meanwhile, analysts suggest card providers might offer alternative solutions like lower rates for specific customers or no-frills cards with lower limits.
