NEW YORK (AP) – Until this week, Wall Street had generally benefited from the Trump administration’s policies and supported the president. The relationship suddenly deteriorated.
When Donald Trump was president Signed the “One Big Beautiful Bill” into law In July, he pushed for another big tax cut, sometimes cutting the budget of the banking industry’s nemesis, the Consumer Financial Protection Bureau, by nearly half. The Trump administration’s banking regulators are also pushing for deregulatory policies that are embraced by both banks and large corporations.
But now the president is proposing 10% for one year. Set a cap on credit card interest ratesis a lucrative business for many financial institutions, and the Department of Justice US Federal Reserve Chairman Jerome Powell launched an investigation Many say this threatens the institution that is supposed to set interest rates without political interference.
Bank CEOs warned the White House on Tuesday that President Trump’s actions will do more harm than good to the U.S. economy.
BNY CEO Robin Vince told reporters that pursuing Fed independence “doesn’t seem to us to be achieving the administration’s primary objectives of affordability, lower borrowing costs, lower mortgage costs, and lower costs of daily living for Americans.”
“Let’s not do anything that would shake up the foundations of the bond market, which could actually push interest rates higher, because somehow 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. Banks may have been hoping that Mr. Powell and other Fed policymakers would move rates more quickly in some way, but they generally understand why Mr. Powell did what he did.
“I don’t agree with everything the Fed does, but I have a lot of respect for the person Jay Powell does,” JPMorgan Chase CEO Jamie Dimon told reporters on Tuesday.
Alongside his attack on the Federal Reserve, President Trump is also going after the credit card industry. With affordability likely to be a key issue in this year’s midterm elections, President Trump wants to reduce costs for consumers, saying: He wants to cap interest rates on credit cards at 10%. It’s unclear whether he wants to accomplish this simply by bullying the credit card industry into voluntarily capping interest rates, or through some sort of administrative action.
The average interest rate on credit cards is between 19.65% and 21.5%, according to the Federal Reserve and other sources that track the industry. The 10% cap is likely to put a rough burden on banks. $100 billion in lost revenue Researchers at Vanderbilt University found that the equivalent of one year per year. Shares of credit card companies including American Express, JPMorgan, Citigroup and Capital One fell sharply on Monday as investors worried that those banks could see their profits hit if interest rate caps were introduced.
JPMorgan Chief Financial Officer Jeffrey Burnham signaled on a call with reporters that the industry is prepared to fight with all available resources to stop the Trump administration from capping interest rates.
Mr Burnham said: “We believe that this type of action would have the exact opposite effect of what the government wants in terms of supporting consumers.” “Rather than lowering the price of credit, it simply reduces the supply of credit, which is bad for everyone: consumers, the broader economy, and of course us.”
President Trump seems to have doubled down on his attacks on the credit card industry overnight. In a post on his social media platform Truth Social, he said he supports the bill introduced by Sen. Roger Marshall (R-Kansas). The bill would likely significantly reduce the revenue banks earn from merchants when accepting credit cards in stores.
“Everyone should support our great Republican Sen. Roger Marshall’s Credit Card Competition Act to stop out-of-control swipe fee rip-offs,” President Trump wrote.
As major banks report quarterly results, comments from Wall Street are pouring in. JP MorganNew York Mellon Corp., the nation’s largest consumer and investment bank, and Bank of New York Mellon Corp., one of the world’s largest custodian banks, will both report earnings on Tuesday, with Citigroup, Bank of America, Wells Fargo and others scheduled to report later this week.
