U.S. banks will face a political test Tuesday in dealing with President Donald Trump’s call to cap credit card interest rates, leaving the financial sector uncertain about how to proceed, according to multiple industry sources.
Trump said on Jan. 10 that he was calling for a one-year cap on credit card interest rates at 10% starting Jan. 20, a move that hit stock prices and prompted banks to warn that it would hurt consumers’ access to credit. However, the White House did not provide details on how the plan will come to fruition that day or how it will be implemented.
Such a drastic measure likely could not be enforced through executive branches or financial regulators and would require legislation in Congress, where such efforts have failed in the past, according to regulatory experts and analysts.
White House economic advisor Kevin Hassett had previously floated the idea that banks would offer voluntarily rather than be forced by a new law, speaking Friday on Fox Business Network’s ‘Mornings with Maria.’
Bloomberg reported on Friday that the White House was evaluating the possibility of using executive action, citing sources.
The lack of firm guidance leaves banks in a quandary ahead of Tuesday. Some analysts say the industry could push for a deal in which lenders launch new products with lower rates and fewer benefits.
