Klarna CEO Sebastian Siemiatkowski explains why he helps President Donald Trump’s push to cap bank card rates of interest at 10% on ‘The Claman Countdown.’
JPMorgan Chase CEO Jamie Dimon issued a stern warning about President Donald Trump’s bank card fee cap on the World Financial Discussion board in Davos on Wednesday, saying that it might be an “financial catastrophe.”
Trump stated that he needs to impose a ten% cap on bank card rates of interest for one yr, saying he needs to stop customers from being “ripped off” by bank card issuers, with rates of interest that will exceed 20% for some debtors.
When requested whether or not Trump’s proposed fee cap was a foul thought, Dimon stated throughout a moderated dialogue in Davos that whereas it might have an effect on the financial institution’s enterprise, it might “survive it,” however warned the cap would restrict credit score for a majority of customers.
TRUMP CALLS FOR 1-YEAR 10% CAP ON CREDIT CARD INTEREST RATES
“It might be an financial catastrophe,” Dimon stated. “It might take away credit score from 80% of Individuals. And that’s their back-up credit score.”
President Donald Trump stated that he needs to impose a ten% cap on bank card rates of interest for one yr. (Alexander Tamargo/Getty Pictures for America Enterprise Discussion board)
Earlier than implementing this, Dimon stated it needs to be examined in two states.
“They need to power all of the banks to do it in two states, Vermont and Massachusetts, and see what occurs,” Dimon stated. He didn’t point out a cause for selecting the states, however the comment drew laughter from attendees.
TRUMP’S PROPOSED CREDIT CARD INTEREST RATE CAP COULD CURB ACCESS FOR MILLIONS OF AMERICANS: REPORT
His feedback echo issues from JPMorgan CFO Jeremy Barnum, who stated final week that the push to place a ten% cap on bank card rates of interest might harm the broader economic system and considerably cut back entry to credit score.
President Donald Trump known as for a one-year cap on bank card rates of interest, blaming excessive prices on the Biden administration. (Brent Lewin/Bloomberg by way of Getty Pictures / Getty Pictures)
“What’s truly merely going to occur is that the availability of the service will change dramatically. Particularly, folks will lose entry to credit score, like on a really, very intensive and broad foundation, particularly the individuals who want it,” Barnum stated throughout a name tied to the financial institution’s fourth-quarter earnings launch.
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Barnum stated this might create a “severely destructive consequence for customers and, frankly, most likely additionally a destructive consequence for the economic system as an entire.”
The president’s proposal follows the introduction of a invoice final yr by Sens. Bernie Sanders, I-Vt., and Josh Hawley, R-Mo., that may cap bank card APRs at 10%.
Earlier than implementing this, Dimon stated it needs to be examined in two states. (iStock)
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Richard Hunt, govt chairman of the Digital Funds Coalition (EPC), advised reporters that EPC’s evaluation of a ten% bank card cap discovered that almost each bank card account related to a credit score rating under 740 could be closed or severely restricted if a ten% rate of interest cap had been applied.
That may impression 175 million to 190 million American cardholders who would lose entry to their bank cards, primarily lower- and middle-income households. Knowledge from the Federal Reserve Financial institution of New York discovered the typical credit score rating for low-income Individuals was 658 whereas it was 735 for middle-income households.
