On Wednesday, President Donald Trump called on U.S. lawmakers to implement a cap on credit card interest rates, proposing a limit of 10% for one year. He made this statement while attending the World Economic Forum in Davos, Switzerland, emphasizing the potential benefits for millions of Americans who could then save for homes.

“They’re charging Americans 28%, 30%, 31%, 32% interest rates,” Trump remarked, questioning where the limits of interest rates had gone, even comparing them to loan sharks.

This announcement had an immediate effect on the market; bank stocks saw a rise, particularly the KBW Bank Index, which increased by 2.2% in the morning session. Capital One, heavily reliant on card revenue, saw its shares gain 1.9%.

It seems that among the various strategies the Trump administration has proposed to influence banks on interest rates, the legislative route might be the least aggressive. A past bill, introduced by Senators Josh Hawley from Missouri and Bernie Sanders from Vermont, aimed to set annual credit card interest rates at 10% for five years, but it has faced significant hurdles in Congress.

Analysts, like Sanjay Saklani from KBW, express skepticism regarding the likelihood of bipartisan support for such legislation, noting that many Republicans, including House Speaker Mike Johnson, have voiced concerns over managing card prices.

“If this policy goes through, it’s unlikely to happen,” Saklani commented, pointing out that much of the Republican leadership is against this idea and highlighting potential negative impacts on other industries, such as airlines and retail.

This situation may reveal the extent of Trump’s influence over the financial sector and their willingness to forfeit substantial revenue in light of his push for affordability as he heads into an election year.

Following Trump’s post on January 9 regarding interest rate caps, banks indicated during their earnings calls that such measures could lead to unintended consequences for lenders, potentially resulting in the cancellation of accounts, especially for those with lower credit scores.

While Trump claimed that lenders not adhering to the interest caps were “breaking the law,” bank representatives argued they were already in compliance.

Interestingly, behind closed doors, bankers and lobbyists expressed their intent to resist the president’s request, especially given the challenges in passing the proposed legislation.

On a related note, several major credit card issuers stated on Tuesday that there hadn’t been any adjustments to their interest rates, though they preferred to remain anonymous. Saklani noted he hadn’t heard of any major card companies lowering their rates either.

During the event in Davos, JPMorgan Chase’s CEO, Jamie Dimon, suggested testing interest rate caps in just two states, Vermont and Massachusetts, arguing this could provide valuable insights for proponents of such controls. He expressed that a wider implementation would result in significant economic repercussions, stating, for a vast majority, such measures could drastically undermine the credit card market.