JPMorgan CFO Says Proposed Credit Card Caps Would Hurt Consumers

A JPMorgan Chase official says the banking industry could fight proposed credit card price caps.

Jermey Barnum, the bank’s chief financial officer, made those remarks Tuesday (Jan. 13) during a call with reporters to discuss JPMorgan’s earnings.

“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,” said Barnum, whose comments were reported by CNBC. “We owe that to shareholders.”

According to the report, Barnum was replying to a question about whether banks would go to court to block a demand last week by President Donald Trump that credit card companies impose a one-year, 10% cap on interest rates.

The report noted that the industry last year prevailed against the Consumer Financial Protection Bureau’s (CFPB) effort to cap card late fees.

Now, CNBC added, banks and industry experts say a cap on interest rates would mean fewer credit card accounts for Americans and a decline, as companies would simply pull accounts instead of offering them at an unprofitable level.

“Our belief is that actions like this will have the exact opposite consequence to what the administration wants for consumers,” Barnum said. “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.”

Among the industry groups pushing back on Trump’s are the Bank Policy Institute, American Bankers Association, Consumer Bankers Association, Financial Services Forum and Independent Community Bankers of America.

“We share the President’s goal of helping Americans access more affordable credit,” the groups said in a statement provided to PYMNTS, adding that a 10% cap would hurt families and small businesses who rely on credit cards.

“If enacted, this cap would only drive consumers toward less regulated, more costly alternatives,” the group added.

Barnum declined to directly respond to a question about whether JPMorgan would meet Trump’s demand, which has a proposed start date of Jan. 20. The president has said that banks that don’t comply are in violation of the law.

And as CNBC points out, it is not clear how the proposal would be enforced, as there is no law capping credit card rates.

A bill introduced last year by Sen. Josh Hawley, R-Mo., and Sen. Bernie Sanders, I-Vt., imposed a five-year, 10% limit on card interest rates.