Banks bet they can push back on price controls

America’s biggest banks are showing no signs of capitulating to President Donald Trump’s mandate to cut credit card interest rates, setting up a showdown just as the president is expected to take the world stage next week in Davos.

The leaders of JPMorgan Chase And Citi Group warned this week that instead of offering cards at a 10% interest rate, as Trump ordered by Jan. 20, banks would simply close many customers’ accounts.

“An interest rate cap is not something we would or could support,” Citigroup Chief Financial Officer Mark Mason told reporters Wednesday.

This would “restrict access to credit to those who need it most and frankly would have a deleterious impact on the economy,” he said.

On Tuesday, JPMorgan Chief Financial Officer Jeremy Barnum indicated the industry could defend itself in court if necessary, saying “everything is on the table” in terms of a response.

Trump, eager to address voters’ concerns about affordability ahead of this year’s midterm elections, launched his offensive against banks in a social media post Friday evening alleging the industry was ripping off credit card borrowers. In media interviews and follow-up publications, Trump doubled down and approved a separate bill targeting swipe fees paid by merchants.

But five days after the initial threat, the bankers and their lobbyists told CNBC that they had yet to receive formal or written guidance from the Trump administration regarding the policy.

That gives some of them hope that the administration isn’t serious about pursuing interest rate caps, according to industry insiders, who requested anonymity to speak candidly.

While Trump said banks that fail to meet the rates would be “in violation of the law,” there is currently no U.S. law capping card rates. A bill introduced last year that would cap rates at 10% for five years has stalled in Congress.

“We are currently in compliance with the law,” said a person with knowledge of the operations of a large card issuer.

Barring legislation, which is unlikely, the industry will either avoid caps altogether or be forced to offer concessions, similar to how Trump dealt with the pharmaceutical industry, Wolfe Research analysts led by Tobin Marcus said in a note Tuesday.

“We continue to view drugmakers as a case study for how this type of transaction under threat could play out,” Marcus said. “In this case, Trump had enough leverage to get new price commitments, but not enough to get truly painful commitments.”

The financial industry is heavily focused on two upcoming events to get a sense of how the credit card battle will play out, sources told CNBC.

The first is this month’s Senate meetings, where bills being developed could see the addition of Trump’s rate cap or a push to limit interchange fees. But that path is unclear, given that several Republicans, including House Speaker Mike Johnson, have already indicated they would not support price controls on credit cards.

The other looming date is next Wednesday, the day after Trump’s January 20 deadline. That’s when Trump will address business and political leaders at the annual World Economic Forum in Davos, Switzerland. U.S. Treasury Secretary Scott Bessent and CEOs including JPMorgan’s Jamie Dimon are also expected to attend.

At last year’s Davos conference, Trump surprised Bank of America CEO Brian Moynihan by accusing him and Dimon of discriminating against conservatives when it came to access to bank accounts.