New York: U.S. banks on Tuesday face a tricky political test in how to address a call from President Donald Trump to cap credit card interest rates – leaving the finance industry scrambling on how to proceed, according to several industry sources. Trump said on January 10 he was calling for a one-year cap on credit card interest rates at 10% starting on January 20, a move that hit share prices and prompted banks to warn it would hurt consumers’ access to credit. However, the White House has not provided details on how the plan will come to fruition on that day or how it would be enforced.
Such a dramatic move could likely not be enforced through executive powers or financial regulators and would require legislation in Congress, where such efforts have failed in the past, according to regulatory experts and analysts. White House economic adviser Kevin Hassett earlier floated floated the idea of “Trump cards” that banks would voluntarily offer instead of being forced by a new law, speaking on Friday to Fox Business Network’s “Mornings with Maria” program. Bloomberg on Friday reported that the White House was weighing using an executive action, citing sources. The lack of firm guidance leaves banks with a dilemma ahead of Tuesday. Some analysts say the industry may push for a compromise in which lenders launch new products with lower rates and fewer benefits.
