JPMorgan Chase CEO Jamie Dimon on Wednesday warned that President Trump’s 10% credit card cap would force banks to yank credit lines for most Americans – hammering the economy.
“Of course we want affordability,” Dimon said during an interview with the Economist at the World Economic Forum in Davos, Switzerland. But the 10% cap “would be a [sic] economic disaster.”
“Our business, we would survive it by the way,” he added. “In the worst case, you would have a drastic reduction of the credit card business.”
The interest rate cap could ultimately lead to 80% of Americans having their credit stripped, Dimon estimated.
He nodded to the partisan nature of the credit card cap, which is largely supported by Democrats, saying, “They should force all banks to do it in two states, Vermont and Massachusetts, and see what happens.”
Earlier this month, Trump called for a one-year 10% cap on credit card rates starting Jan. 20, though there have been few details on the policy since then.
The president argued a cap would benefit consumers who have been “ripped off” by credit card companies that charge rates of 20% to 30%.
Trump also ordered a $200 billion mortgage bond-buying spree and signed an executive order Tuesday banning institutional investors from buying single-family homes in an effort to improve housing affordability.
New York-based startup Bilt last week unveiled new credit cards with a 10% APR for the next 12 months, becoming the first to heed Trump’s call – even as Wall Street panicked that a cap could squash spending and transaction volumes.
Banking groups also warned that government-imposed limits would restrict card approvals only to consumers with high incomes and excellent credit scores, and force lenders to dismantle popular rewards programs that are funded by interest income and fees.
Dimon said Wednesday that JPMorgan will put together a “real analysis” on the proposal’s effects to send to the government, adding it has already shared some thoughts on the cap, “but not a lot.”
JPMorgan Chief Financial Officer Jeremy Barnum also pushed back on the cap last week, saying it would be “very bad for consumers” and the economy.
Bank of America CEO Brian Moynihan and top financial executives at Citigroup and Wells Fargo also sounded alarm bells over the potential effects of a 10% cap.
Proponents of the cap on credit card interest rates – which Trump first floated on the campaign trail – argued it would provide substantial relief to consumers bogged down by inflation.
