Trump expects credit card companies to reduce costs

Summary

The White House announced that President Trump expects credit card companies to lower their costs for consumers.Zhitong This follows his recent proposal to cap credit card interest rates at 10% to combat what he calls predatory rates of 20-30%.Zhitong+ 2 The move is framed as a way to ease the cost of living for Americans ahead of the midterm elections.Zhitong However, the banking industry has warned that such a cap would disrupt risk-based pricing, harm profitability, and could lead to millions of consumers losing access to credit, potentially pushing them towards higher-cost lenders.InfoCast+ 2

Impact Analysis

This isn’t really about economics; it’s a political shakedown. Trump is weaponizing populist anger over living costs against the credit card industry.Zhitong+ 2 They want the market to see this as helping consumers, but the real signal is that no industry is safe from arbitrary political targeting. A 10% rate cap is an existential threat to the business model of issuers like Capital One and Discover—it completely destroys risk-based pricing.InfoCast+ 2 The second-order effect is a massive credit crunch, as they’d be forced to cut off all but the most pristine borrowers. This directly contradicts his other pro-growth, deregulatory rhetoric.Wallstreetcn+ 2

Bottom line: this creates an un-investable level of political risk for the entire sector. The threat alone will compress multiples. This is a clear signal to stay short or underweight the pure-play card issuers. The headline risk is the story now, and it’s not going away.