Jamie Dimon, JPMorgan CEO, on Trump’s plans to limit credit card rates: “It would be an economic disaster”
The most influential person in modern banking didn’t hold back about what he thinks of President Trump’s planned 10% cap on credit card interest rates.
Earlier this month, President Donald Trump used his bully pulpit to throw his support behind the idea of a 10% cap on credit card interest rates for at least one year. The proposal has bipartisan support in both chambers of Congress where legislation has been introduced.
Trump said that the limit would take effect on 20 January this year, the one-year anniversary of his return to the White House after a four-year absence. So far, not a single bank has implemented such a limit, although Bank of American says that it is considering offering a credit card with such a cap for one year reports NBC News.
On Wednesday, Trump used his time at the podium in Davos, Switzerland, to bring up the proposal again. Before he spoke at the World Economic Forum though, JPMorgan CEO Jamie Dimon, considered the most influential person in modern banking, sat down for an interview with Economist Editor-in-Chief Zanny Minton Beddoes and was asked if a 10% cap would be a bad idea.
“It would be a economic disaster,” he responded.
“Cap could strip credit from 80% of Americans”
Dimon started off explaining that his view of the proposal wasn’t biased by the fact that it would affect his business, “we would survive it,” he said.
“In the worst case, you would have a drastic reduction of the credit card business. I mean drastic,” Dimon explained. “It would remove credit from 80% of Americans, and that is their backup credit.”
The JPMorgan CEO went on to predict who would get hit the hardest. “The people crying the most won’t be the credit card companies. It’ll be the restaurants, the retailers, the travel companies, the schools, the municipalities,” Dimon said, explaining that would be because of people not being able to make payments.
“It would be something else to watch,” he added.
Jamie Dimon proposes an experiment to test 10% proposal
“I have a great idea,” declared the highly respected banker. “Since this is a huge disagreement, this one, you know between Republicans and Democrats, I think we should test it.”
While Senator Josh Hawley and US Representative Anna Paulina Luna, both Republicans, have cosigned legislation in their respective chambers of Congress, Dimon chose to target two Democrats, Bernie Sanders and Elizabeth Warren, who have championed a 10% credit card interest cap, without mentioning them by name.
“[The government] should force all the banks to do it in two states, Vermont and Massachusetts, and see what happens,” he suggested which got a laugh out of the room.
“I think they should test it,” he reiterated.
Dimon didn’t express too much concern though when Minton Beddoes said that Trump seems to want to roll the credit card interest rate limit out more broadly. “Whatever it is we’ll deal with it,” he said. “I think it’s wrong to, for the government to get involved too extensively in pricing and stuff. But you know, I got to deal with the world I got.”
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