President Trump on Wednesday said he will go to Congress with his plan to cap credit card fees at 10%, the first time he’s mentioned that he wants lawmakers to sign off on one of his cost-of-living proposals.
“The profit margins for credit card companies now exceeds 50% — one of the biggest — and charge interest rates of 28%, 30%. Whatever happened to usury?” Mr. Trump said during his speech at the World Economic Forum in Davos, Switzerland.
“To help our citizens recover from the Biden disaster, all caused by this horrible president, I’m asking Congress to help cap interest rates at 10% for one year. And this will help millions of Americans save for a home,” he added. “They have no idea they are paying 28%. They get a little late with their payment, and they lose their house.”
Usury refers to the practice of lending money at unreasonably high rates of interest. It’s referenced in the Bible, and many states and countries had usury laws in the early 20th century.
Mr. Trump has few options to pressure American banks over credit card rates outside of going to Congress. A bill was introduced last year from Sen. Josh Hawley, Missouri Republican, and Sen. Bernard Sanders, Vermont independent, that would limit credit card interest at 10% for five years. That bill has stalled in Congress.
Among the options that the Trump administration has for applying pressure on American banks, the legislative path may be less threatening. The president has little authority to sway the private banks, which would be giving up billions of dollars in revenue to go along with his plan. Earlier this month, he suggested that lenders who don’t comply with his proposal would be violating the law, but it’s not clear which law he was referencing. Banks have countered that their practices are legal.
Earlier Wednesday, JPMorgan Chase CEO Jamie Dimon criticized Mr. Trump’s plan during his remarks in Davos. Mr. Dimon said the U.S. government should test out the rate cap in Vermont and Massachusetts because it would teach “a real lesson” to those who favor price controls.
“It would be an economic disaster,” he said of capping rates. “In the worst case, you’d have a drastic reduction of the credit card business” for 80% of Americans.
