Will the banking sector blow off the 10% credit card cap?

WABAC

CNBC reports:

JPMorgan Chase

CFO Jeremy Barnum hinted Tuesday the industry could fight President Donald Trump’s demand for credit card price controls, saying “everything’s on the table.”

“If you wind up with weakly supported directives to radically change our business that aren’t justified, you have to assume that everything’s on the table,” Barnum said in a call with reporters following JPMorgan’s fourth-quarter earnings report. “We owe that to shareholders.”

/snip

“Our belief is that actions like this will have the exact opposite consequence to what the administration wants for consumers,” Barnum said. “Instead of lowering the price of credit, we’ll simply reduce the supply of credit, and that will be bad for everyone: consumers, the wider economy, and yes, at the margin, for us.”

Dear Leader has no legal authority to impose his will on the banks. My guess is that they will just ignore the high-decibel bloviations. Of course the CEO's would run the risk of having their mortgage papers and building permits sifted by the DOJ.

WABAC

CNBC reports:

JPMorgan dipped more than 2% after CFO Jeremy Barnum signaled that the banking industry could push back against President Donald Trump’s call for a one-year 10% cap on credit card interest rates. Goldman Sachs followed JPMorgan lower, declining more than 1%. Other financial stocks such as Mastercard and Visa traded down roughly 5% each. The State Street Financial Select Sector SPDR ETF (XLF) and Invesco KBW Bank ETF (KBWB) were also under pressure.

“The path forward isn’t necessarily clear,” Tim Holland, chief investment officer at Orion, said, adding that he anticipates pushback from both a legal and Congressional point of view if Trump were to move forward with his demand for price controls. He also said that he doesn’t believe the development is “that meaningful” in the near term.

Dear Leader has no legal authority to impose a cap, so I don't know what legal options the banking sector would need to pursue.

DrVenture

And trump has no idea what he is doing, either. Micromanaging everything, based on whims and horrible advice. This notion that a guy who managed to bankrupt casinos, knows everything about everything, is bizarre.

Sven

These moves are deflecting tactics on Epstein files that were suppose to be released. Guess someone is busy redacting the documents.

Isn’t he over-stepped his authority ? That is reserved for the CEOs of the banks. Banks in the public markets answer to the shareholders and board of director. For sure they do not answer to the President.

msf

That is reserved for the CEOs of the banks.

Interest rates charged by credit cards are regulated. But by states, not by federal law. In 1980, Citibank moved its credit card division to South Dakota to take advantage of its lenient regulations. And the rest is history.

The lack of a usury law in South Dakota combined with a Supreme Court ruling that said companies could use the state’s laws where the company was headquartered led to a financial boom. Even if a card was used in another state, South Dakota laws governed interest rates.

https://www.sdnewswatch.org/giga-fact-brief-sd-credit-card-companies-citi-wells-fargo/

See also: https://www.bankrate.com/credit-cards/zero-interest/does-law-cap-credit-card-interest-rates/

Congress has the power to step in and impose federal limits on rates. But does Congress have the capability to pass any legislation these days?

Sven

@msf, i stand corrected on my earlier statement.

But does Congress have the capability to pass any legislation these days?

the answer is no!. So far, congress defers their authority to the President. Who actually represent the wills of the people?