Wall Street executives have expressed growing concern over President Donald Trump's recent proposals that target the Federal Reserve and the credit card industry.Bank CEOs warned that these actions could do more harm than good to the American economy, a sentiment that marks a significant shift in the relationship between Wall Street and the Trump administration, which had previously enjoyed mutual support.
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pbs.orgnews4jax.comTrump's proposal includes a one-year, 10% cap on credit card interest rates, a move that many financial institutions view as a direct threat to their profitability.The average interest rate on credit cards currently ranges from 19.65% to 21.5%, and implementing a cap could cost banks approximately $100 billion in lost revenue annually, according to researchers at Vanderbilt University.
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news4jax.cominvestmentexecutive.comIn addition to the interest rate cap, the Department of Justice has launched an investigation into Federal Reserve Chair Jerome Powell, raising concerns about the independence of the Fed, which is crucial for maintaining stable economic conditions.
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pbs.orgclickorlando.comRobin Vince, CEO of BNY, emphasized that undermining the Fed's independence does not align with the administration's goals of improving affordability and reducing living costs for Americans.He cautioned that such actions could destabilize the bond market and lead to higher interest rates due to diminished confidence in the Fed's autonomy.
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pbs.orgwashingtonpost.comJPMorgan Chase CEO Jamie Dimon echoed these concerns, stating that while he may not agree with all of the Fed's decisions, he respects Powell's leadership.Dimon noted that the Fed's independence is vital for effective monetary policy.
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news4jax.comclickorlando.comDespite the backlash from financial leaders, Trump has remained steadfast in his stance.He dismissed Dimon's concerns, labeling Powell as "a bad Fed person" and asserting that his actions are justified.
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news4jax.comwashingtonpost.comThe proposed cap on credit card interest rates is particularly contentious as it aims to address affordability, a key issue in the upcoming midterm elections.However, industry experts warn that such a cap could restrict access to credit for lower-income consumers, ultimately harming those it intends to help.
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pbs.orginvestmentexecutive.comJPMorgan's Chief Financial Officer, Jeffrey Barnum, indicated that the credit card industry is prepared to fight against the proposed cap, arguing that it would reduce the overall supply of credit rather than lower costs for consumers.He stated, "Our belief is that actions like this will have the exact opposite consequence to what the administration wants in terms of helping consumers.".
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news4jax.comclickorlando.comThe discontent extends beyond banks to their partners in the airline and hotel industries.Ed Bastion, CEO of Delta Air Lines, expressed concerns that a cap would limit credit access for lower-end consumers, potentially disrupting the entire credit card market.
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pbs.orgwashingtonpost.comIn a recent post on his social media platform, Trump endorsed the Credit Card Competition Act introduced by Senator Roger Marshall, which aims to reduce the fees banks earn from merchants when accepting credit cards.This move further illustrates Trump's commitment to challenging the credit card industry.
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news4jax.cominvestmentexecutive.comAs major banks prepare to report their quarterly results, the tension between Wall Street and the Trump administration continues to escalate.The outcome of these proposals could have significant implications for the financial sector and the broader economy in the coming months.
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pbs.orgclickorlando.comIn summary, Wall Street executives are urging President Trump to reconsider his approach to the Federal Reserve and the credit card industry, warning that his current trajectory could lead to unintended negative consequences for consumers and the economy as a whole.
