Wall Street CEOs warn Trump: Stop attacking the Fed and credit card industry

NEW YORK– Until this week, Wall Street has generally benefited from the Trump administration’s policies and supported the president. This relationship suddenly deteriorated.

When President Donald Trump signed the One Big Beautiful Bill into law in July, he pushed through another round of significant tax cuts and also cut the budget of the Consumer Financial Protection Bureau, sometimes the banking industry’s nemesis, by nearly half. Trump’s banking regulators also pushed a deregulatory agenda that banks and big businesses adopted.

But now the president has proposed a one-year cap at 10% on the interest rate on credit cards, a lucrative business for many financial institutions, and his Justice Department has launched an investigation into Federal Reserve Chairman Jerome Powell, which many say threatens the institution that is supposed to set interest rates without political interference.

Bank CEOs warned the White House on Tuesday that Trump’s actions would do more harm than good to the U.S. economy.

BNY CEO Robin Vince told reporters that pursuing Fed independence “does not seem to us to achieve the administration’s primary goals of things like affordability, reducing the cost of borrowing, reducing the cost of mortgages, reducing the cost of daily living for Americans.” »

“Let’s not shake the foundations of the bond market and potentially do something that could cause interest rates to rise, because one way or another there is a lack of confidence in the independence of the Fed,” Vince added.

The independence of the Federal Reserve is sacrosanct among big banks. Although banks may have wanted Powell and other Fed policymakers to move interest rates more quickly in some way, they generally understood why Powell did what he did.

“I don’t agree with everything the Fed has done. I have enormous respect for Jay Powell, the man,” Jamie Dimon, CEO of JPMorgan Chase, told reporters on Tuesday.

Along with attacks on the Fed, President Trump is attacking the credit card industry. While “affordability” will likely be a key issue in this year’s midterm elections, Trump wants to lower costs for consumers and says he wants a 10% cap on credit card interest rates in place by January 20.

The average interest rate on credit cards is between 19.65% and 21.5%, according to the Federal Reserve and other industry tracking sources. A 10% cap would likely cost banks about $100 billion in lost revenue per year, Vanderbilt University researchers found. Shares of credit card companies like American Express, JPMorgan, Citigroup, Capital One and others fell sharply Monday as investors worried about the potential impact on these banks’ profits if an interest rate cap was put in place.

In a call with reporters, Jeffrey Barnum, JPMorgan’s chief financial officer, said the industry is prepared to fight with every resource at its disposal to stop the Trump administration from capping those rates.

“Our belief is that actions like this will have the exact opposite consequence of what the administration wants in terms of helping consumers,” Barnum said. “Instead of lowering the price of credit, it will simply reduce the supply of credit, and that will be bad for everyone: consumers, the economy as a whole, and yes, for us too. »

Overnight, Trump seemed to double down on his attacks on the credit card industry. In a post on his social media platform Truth Social, he said he supports a bill introduced by Sen. Roger Marshall of Kansas that would likely reduce the revenue banks earn from merchants each time they accept a credit card at the point of sale.

“Everyone should support great Republican Senator Roger Marshall’s Credit Card Competition Act to end the out-of-control Swipe Fee scam,” Trump wrote.

Wall Street’s comments come as major banks release quarterly results. JPMorgan, the nation’s largest consumer and investment bank, and The Bank of New York Mellon Corp., one of the world’s largest depository banks, both reported results Tuesday. Citigroup, Bank of America, Wells Fargo and others will release them later this week.