Bank of America CEO Critiques Trump’s Interest Rate Proposal
Brian Moynihan, the CEO of Bank of America, has spoken out against President Trump’s recent suggestion to implement a 10% cap on credit card interest rates for a year. Moynihan is the first major banker on Wall Street to voice concerns that this move could restrict credit access for many individuals and ultimately hurt those who genuinely need assistance.
“Of course, we all want things to be affordable,” Moynihan commented during a recent earnings call. However, he cautioned that such lower interest rates might lead to a credit crunch.
“What this means is that credit availability would be limited, resulting in fewer people able to obtain credit cards and lower balances on those cards,” he added.
Trump’s proposal, which he unveiled unexpectedly on Truth Social, aimed to address what he termed excessive charges that burden American wallets.
The announcement took the financial industry by surprise, leading to a drop in bank stocks of about 5% to 8% as investors weighed the potential impacts on major U.S. financial institutions.
Mark Mason, who is leaving his role as Citigroup’s CFO, warned about the potential “unintended consequences” for consumers due to the proposed cap.
“This could have cascading effects on various sectors and could significantly slow down the economy,” he stated after revealing Citigroup’s fourth-quarter results.
“While the headlines might sound attractive to many, it’s crucial to think carefully about what the unintended consequences may be,” Mason further remarked.
Mike Santomassimo, CFO at Wells Fargo, echoed these sentiments, suggesting that the cap might negatively affect economic growth and credit access.
“We fully acknowledge the concerns about affordability that countless families face,” Santomassimo noted during a call with reporters. “But it’s vital for many individuals to have access to credit through regulated banks. This proposal could significantly alter credit availability for a large number of people.”
A startup based in New York, called Bild, has already seized the opportunity presented by Trump’s announcement by launching a lineup of credit cards with an annual interest rate of 10% for the next year.
Credit cards are a lucrative business for banks, as they typically charge high interest rates to offset the risks associated with unsecured loans. Data from the Federal Reserve indicated that the average interest rate stood at 20.97% in November.
Research conducted by Vanderbilt University last year suggested that a cap, if implemented, could save Americans around $100 billion annually, causing only minor disruptions to compensation and accounts.
“We’ll need to reevaluate our models considering the added risks and ongoing price regulations,” JPMorgan CEO Jamie Dimon remarked on a conference call. “This would be quite a shift.”
Concerns have arisen among Wall Street executives, who have criticized Trump’s ideas as impractical and potentially damaging to ordinary Americans.
How exactly the Trump administration would enforce this cap—whether through executive action, voluntary agreements with banks, or legislative measures—remains uncertain.
House Speaker Mike Johnson from Louisiana mentioned on Tuesday that lawmakers should deliberate on a cap, but noted the possibility of adverse effects.
This type of proposal has generally been championed by more progressive figures like Senator Elizabeth Warren from Massachusetts and Vermont’s Bernie Sanders, who contend that high credit card interest rates exploit consumers.
