By Chinonyerem Emmanuel
The United States’ biggest banks are showing little appetite for backing down from President Donald Trump’s aggressive push to slash credit card interest rates, setting the stage for a very public showdown just as Trump prepares to step into the global spotlight next week in Davos.
Rather than comply with Trump’s demand that credit card interest rates be capped at 10% by Jan. 20, top banking executives are signaling a stark alternative: they would rather shut down millions of credit card accounts than operate under what they view as an unworkable mandate.
Executives at JPMorgan Chase and Citigroup made that position crystal clear this week. Citigroup Chief Financial Officer Mark Mason said bluntly that a rate cap is a nonstarter for the industry.
“An interest rate cap is not something that we would or could support,” Mason told reporters on Wednesday, warning that such a move would ultimately hurt the very consumers it’s meant to help.
According to Mason, limiting rates would “restrict access to credit to those who need it the most” and would have a “deleterious impact on the economy.” In other words, banks argue that lower rates wouldn’t mean cheaper credit, it would mean no credit at all for higher-risk borrowers.
JPMorgan CFO Jeremy Barnum struck a similarly defiant tone a day earlier, suggesting that the industry is prepared to fight back if necessary. Asked about how banks might respond to Trump’s pressure, Barnum said, “Everything’s on the table,” including legal action to defend their business models.
Trump’s offensive against the banking sector began late Friday with a social media post accusing lenders of gouging Americans with sky-high credit card rates. Since then, he has doubled down in interviews and follow-up posts, framing the issue as a kitchen-table affordability crisis ahead of this year’s midterm elections.
He has also thrown his support behind a separate proposal targeting the interchange, or “swipe”, fees paid by merchants—another long-running source of tension between banks and retailers.
Yet despite the heated rhetoric, bankers and industry lobbyists told CNBC that no formal guidance, draft rules, or written directives have arrived from the Trump administration. Five days after the initial threat, there is still no official policy on the table.
That silence has fueled cautious optimism within the industry. Several insiders, speaking anonymously, say they hope the administration’s pressure campaign is more political posturing than a serious regulatory push.
Deal or Deadlock?
Trump has warned that banks refusing to comply would be “in violation of the law”. The problem: there is currently no U.S. law that caps credit card interest rates. A bill introduced last year proposing a temporary 10% cap for five years has gone nowhere in Congress.
“We are legally compliant right now,” said one person familiar with operations at a major card issuer.
Absent new legislation, which appears unlikely, the industry faces two realistic outcomes. Either banks successfully sidestep the proposed caps altogether, or Trump forces a compromise that stops short of fundamentally altering the business. Wolfe Research analysts, led by Tobin Marcus, likened the situation to Trump’s earlier standoff with the pharmaceutical industry.
“We continue to view the drugmakers as the case study in how this kind of dealmaking-under-threat could go,” Marcus wrote in a note Tuesday. “In that case, Trump had enough leverage to secure some new pricing commitments, but not enough to extract truly painful concessions.”
For now, Wall Street is watching two key developments that could determine how this battle unfolds.
The first is a series of Senate meetings later this month, where lawmakers could attempt to fold Trump’s rate cap proposal, or restrictions on interchange fees, into existing legislation. That path remains uncertain at best. Several Republicans, including House Speaker Mike Johnson, have already signaled opposition to price controls on credit cards.
The second, and perhaps more symbolic moment arrives next Wednesday, the day after Trump’s self-imposed Jan. 20 deadline. Trump is scheduled to address global business and political leaders at the World Economic Forum in Davos, Switzerland. Treasury Secretary Scott Bessent will be there, along with heavyweight CEOs such as JPMorgan’s Jamie Dimon.
The setting is hard to ignore. At last year’s Davos gathering, Trump stunned the audience by accusing Dimon and Bank of America CEO Brian Moynihan of discriminating against conservatives by denying them access to banking services.
With that history, and with credit card rates now squarely in the political crosshairs, Davos could become the next flashpoint in Trump’s escalating confrontation with Wall Street. Whether it ends in a deal, a stalemate, or a courtroom fight remains an open question.
Source: CNBC
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