Wells Fargo CFO Warns Trump's Credit Card Interest Rate Cap Will Affect Credit Availability and Economic Growth

Summary

On a Wednesday earnings call, Wells Fargo’s CFO, Mike Santomassimo, warned that President Trump’s proposed 10% cap on credit card interest rates would significantly harm credit availability for a broad range of consumers and negatively impact economic growth.Reuters+ 2 This proposal, which has drawn strong opposition from the banking industry, suggests a one-year cap starting January 20th and has already pressured bank stocks.Zhitong+ 3 Banks argue the cap would destroy risk-based pricing models, forcing them to deny credit to higher-risk customers.Stheadline+ 2

Impact Analysis

So Wells Fargo’s CFO is using the earnings call to send a clear signal: this isn’t just political noise, it’s a material threat to the entire consumer credit model.Reuters+ 2 A 10% rate cap isn’t a tweak; it blows up risk-based pricing.Zhitong+ 2 They’re essentially telling the market that if this policy moves forward, they have no choice but to cut off credit for a huge portion of the population, which is exactly what Santomassimo means by ‘significant negative impact to credit availability.’Reuters

The real story isn’t just the NIM compression for banks, which the market is already pricing in.AnueSec It’s the second-order effect: a forced credit crunch hitting consumer spending and overall economic growth.Reuters The policy may not even pass, but the threat alone could cause banks to preemptively tighten lending standards. This is a macro headwind forming. I’d be cautious on consumer discretionary names that rely on credit-fueled spending, as they’re the ones who will feel the pain first.