JPMorgan Chase CEO Jamie Dimon has said that United States President Donald Trump’s call to cap credit card interest rates “would be an economic disaster”.
Trump had demanded that banks add a one-year 10% interest rate cap by 20 January, though it has yet to be implemented. Banking stocks, including JPMorgan Chase, have dropped for much of the last two weeks following Trump’s proposal.
“It would remove credit from 80% of Americans, and that is their back-up credit,” said Dimon at the World Economic Forum in Davos.
“The people crying the most won’t be the credit card companies,” Dimon said. “It’ll be the restaurants, the retailers, the travel companies, the schools, the municipalities because people will miss their water payments and this payment and that payment.”
Dimon also suggested that the proposal should be tested in Vermont and Massachusetts, rather than across the U.S. Massachusetts Senator Elizabeth Warren and Vermont Senator Bernie Sanders, both part of the Democratic caucus, have supported caps on credit card interest rates.
Trump called on Congress to pass legislation to cap credit card interest rates during his own Davos address, meanwhile.
“I'm asking Congress to cap credit card interest rates at 10% for one year. And this will help millions of Americans save for a home,” he said.
Trump had originally told banks to comply in a social media post earlier this month, but did not offer details. TD Cowen analysts wrote last week that Congress would be unlikely to pass legislation to cap credit card rates.
