JPMorgan Chase Chief Financial Officer Jeremy Barnum suggested Tuesday that the industry could fight President Donald Trump’s demand for credit card price controls, saying “everything is on the table.”
“If you end up with weak guidance to radically change our business that is not justified, you have to assume that everything is on the table,” Barnum said on a call with reporters following JPMorgan’s fourth-quarter earnings release. “We owe it to the shareholders.”
Barnum was responding to a question about whether banks would choose to sue to block Trump’s demand, made Friday night, that card companies cap interest rates at 10% for a year. Last year, the industry successfully fought the Consumer Financial Protection Bureau’s efforts to cap late fees on cards.
Banks and industry players say a cap on interest rates would lead to fewer credit card accounts for Americans and lower spending on the U.S. economy because companies would simply cash out their accounts rather than offer them at an unprofitable level.
The average credit card rate nationwide is 19.7% this month, according to a weekly survey from Bankrate.com, while rates for subprime borrowers and store-specific cards are generally higher.
“Our belief is that actions like this will have the exact opposite consequence of what the administration wants for consumers,” Barnum said. “Instead of lowering the price of credit, we will simply reduce the supply of credit, and that will be bad for everyone: consumers, the economy as a whole, and yes, at the margin, for us.”
The CFO declined to directly answer a question about whether JPMorgan would comply with Trump’s request, which has a proposed start date of Jan. 20. Banks that don’t follow the directive are “breaking the law,” Trump told reporters Sunday.
It remains to be seen how Trump’s mandate will be enforced. There is no U.S. law capping card rates, although a bill was introduced last year by Sen. Josh Hawley of Missouri and Sen. Bernie Sanders of Vermont that would cap card APRs at 10 percent for five years. This bill is blocked in Congress.
