JPMorgan Chase Chief Financial Officer Jeremy Barnum indicated on Tuesday that the financial industry might resist President Donald Trump’s call for credit card price controls, declaring that 'everything's on the table.'
During a call with reporters following JPMorgan's fourth-quarter earnings report, Barnum stated, 'If you wind up with weakly supported directives to radically change our business that aren't justified, you have to assume that everything's on the table. We owe that to shareholders.'
Barnum’s comments were in response to inquiries about whether banks might consider legal action against Trump's recent Friday directive for credit card companies to cap interest rates at 10% for one year. The previous year, the industry successfully contested similar measures by the Consumer Financial Protection Bureau to cap credit card late fees.
Industry experts and banking insiders argue that an interest rate cap would lead to a reduced number of credit card accounts available to Americans and a decrease in U.S. economic spending, as companies would withdraw accounts rather than offer them at an unprofitable rate.
According to a current survey from Bankrate.com, the national average credit card rate is 19.7%, with higher rates for subprime borrowers and store-specific cards.
Barnum commented, 'Our belief is that actions like this will have the exact opposite consequence to what the administration wants for consumers. Instead of lowering the price of credit, we'll simply reduce the supply of credit, and that will be bad for everyone: consumers, the wider economy, and yes, at the margin, for us.'
When asked directly whether JPMorgan would comply with Trump’s demand, which is proposed to take effect January 20, Barnum declined to provide a clear answer. Trump had told reporters on Sunday that banks not adhering to the directive would be 'in violation of the law.'
However, enforcement of Trump’s mandate remains uncertain. No current U.S. law caps card rates, though a bill introduced last year by Sen. Josh Hawley of Missouri and Sen. Bernie Sanders of Vermont sought to limit card APRs to 10% for five years. The bill is currently stalled in Congress.
On Tuesday, additional voices from the corporate and political spheres weighed in on the potential impact of Trump's proposed rate cap.
Apart from banks, airlines and retailers, which benefit from credit card partnerships to boost profits, could be affected. For example, Delta Air Lines announced that its partnership with American Express generated $8.2 billion in revenue last year. Delta CEO Ed Bastian mentioned during an earnings call that the rate cap would 'upend the whole credit card industry... I don't see any way we could even begin to contemplate how that would be implemented.'
House Speaker Mike Johnson expressed caution about the proposed rate cap during a news conference. 'We have a lot of work to go [on] consensus around it, but you got to be very careful as we go forward in that in our zeal to bring down costs — you don't want to have negative secondary effects,' Johnson remarked.
— Reporting contributions from CNBC's Emily Wilkins and Leslie Josephs.