World’s top banker Jamie Dimon gives Trump brutal reality check over plan to cut credit card costs
JPMorgan Chase's CEO Jamie Dimon has a harsh message for President Donald Trump and his controversial credit card plan.
Earlier this month, Trump said on Truth Social that he intends to pass laws that cap credit card interest at 10 percent for a year.
Asked about the proposal at the World Economic Forum in Davos, Jamie Dimon did not hold back.
‘It would be an economic disaster — and I’m not making that up,’ said Dimon. ‘Our business would survive it, by the way.’
Dimon added: 'The people crying the most won't be the credit card companies, it will be the restaurants, the retailers, the travel companies, the schools, the municipalities because people will miss their water payments.'
He warned that a hard cap on interest rates could end with as many as 80 percent of Americans having their access to credit stripped altogether.
Soon after Dimon's comments, it emerged that Trump had filed a $5 billion lawsuit against JPMorgan Chase accusing the bank and its CEO de-banking him for political reasons.
Dimon also hit back at left-leaning lawmakers who back the cap, including Bernie Sanders and Elizabeth Warren, the Democratic senators from Vermont and Massachusetts respectively.
President Donald Trump has set out to cap interest rates on credit cards
Jamie Dimon (pictured) said the credit card cap would lead to an 'economic disaster'
'I think we should test it,' Dimon said in relation to rolling out a credit card cap.
'The government can do it, they should force all the banks to do it in two states - Vermont and Massachusetts - and see what happens.'
Dimon was echoing the thoughts of his finance chief. Jeremy Barnum, CFO of JPMorgan, warned lenders would simply cut access to credit for less well-off Americans rather than make it cheaper.
‘Instead of lowering the price of credit, we’ll simply reduce the supply of credit — and that will be bad for everyone,’ said Barnum said on a post-earnings call with analysts.
Other banks including Citigroup and Wells Fargo have joined the pushback, also arguing a 10 percent cap would stop them offering cards widely.
Trump has said he wants to impose a one-year limit on credit-card interest rates as part of a broader affordability drive, accusing lenders of ‘ripping off’ Americans with rates of 20 to 30 percent.
Wells Fargo CFO Mike Santomassimo said: 'There would be significant negative impact of credit availability for a wide spectrum of people.'
He also warned about the broader impact on the US economy, saying a cap 'would have a negative impact on economic growth.'
Citigroup's CFO Mark Mason, on the same day, said a cap would restrict credit ‘to those who need it most’ and could trigger a broader economic slowdown.
This would have 'unintended consequences on the consumer' and likely result in a 'significant slowdown on the economy', he added.
During a call with reporters following JPMorgan's fourth quarter earnings report, CFO Jeremy Barnum was asked whether banks would try to block Trump's demand
An interest rate limit is when the government or regulators set a maximum rate that credit card companies can charge on outstanding balances
He also warned about the wider impact on the US economy, saying a cap 'would have a negative impact on economic growth.'
This is because a sharp reduction in access to credit could hit consumer spending — a major driver of the US economy.
The average credit card rate interest rate stands at 19.7 percent, according to a weekly survey from Bankrate.com — nearly double the level Trump wants.
Banks argue that capping rates would fundamentally change how credit cards work.
