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## Trump Administration Unveils Dual Strategy for Credit Card Reform Amidst Industry Pushback
The Trump administration is actively pursuing a two-pronged approach to revolutionize the consumer credit landscape, aiming to make financial access more affordable and widespread. This initiative follows a significant pushback from the financial services sector against a more drastic proposal to cap credit card interest rates, prompting a pivot towards an alternative, potentially voluntary, solution.
White House National Economic Council Director Kevin Hassett, a key figure in shaping this economic agenda, recently shed light on these efforts during an appearance on FOX Business Network’s “Mornings with Maria.” Hassett outlined President Trump’s broader vision, which includes lowering mortgage rates, reducing credit card interest burdens, and stimulating overall economic growth.
### The President’s Bold Call for an Interest Rate Cap
Last week, President Donald Trump sparked considerable debate by proposing a stringent 10% cap on credit card interest rates. Announcing his intention on his Truth Social platform, Trump stated this cap would take effect on January 20th – marking the first anniversary of his hypothetical second inauguration.
#### Industry’s Immediate Backlash and Legislative Hurdles
However, the ambitious proposition quickly faced a wall of opposition from the financial services industry. Experts and institutions alike warned that such a cap would likely necessitate congressional action, and more critically, could lead to millions of credit card users losing access to essential credit facilities. The concern was that lenders would find it uneconomical to offer credit at such low rates, especially to higher-risk borrowers.
### Introducing the “Trump Card”: A New Path to Credit Access
In response to this resistance and the practical challenges of implementing a legislative cap, the administration has begun exploring an alternative: a novel concept dubbed the “Trump card.” This initiative, revealed by Hassett, focuses on expanding credit access through cooperation with major financial institutions, rather than through mandatory legislation.
#### Hassett’s Vision for Expanded Credit
Hassett explained that discussions with CEOs from prominent banks have been encouraging. These financial giants, he noted, recognize the president’s innovative thinking and see merit in his objective. The “Trump card” would target individuals who currently lack significant financial leverage due to limited credit access, despite possessing sufficient income and life stability to be considered creditworthy.
“Our expectation is that it won’t necessarily require legislation, because there will be really great new ‘Trump cards’ presented for folks that are voluntarily provided by the banks,” Hassett elaborated, suggesting a market-driven solution could bypass legislative gridlock. This voluntary approach aims to serve a segment of the population currently underserved by traditional credit offerings.
### Dire Repercussions Predicted for a Mandatory Cap
Beyond the initial outcry, specific analyses have underscored the severe consequences that a 10% interest rate cap could unleash upon the consumer credit market. Critics argue that while the intention is consumer protection, the practical outcome would be significantly detrimental for a vast number of Americans.
#### Data-Driven Concerns from the Electronic Payments Coalition
The Electronic Payments Coalition (EPC) conducted a comprehensive analysis, revealing an alarming forecast: if a 10% cap were enforced, between 82% and 88% of existing credit card holders could see their accounts eliminated or their credit limits drastically reduced. The impact would disproportionately fall on low-to-moderate-income consumers, who often rely more heavily on credit access.
The EPC’s estimates suggest that nearly all credit card accounts associated with a credit score below 740—encompassing an estimated 175 million to 190 million individuals—would face closure or severe restrictions. This highlights a potential credit crunch for a massive portion of the American populace.
#### JPMorgan’s Warning on Broader Economic Impact
Echoing these concerns, Jeremy Barnum, Chief Financial Officer of JPMorgan Chase, articulated the broader economic implications. During a call tied to the bank’s fourth-quarter earnings, Barnum cautioned that a 10% cap would fundamentally alter the provision of credit services, leading to a widespread loss of credit access, particularly for those who need it most.
“What’s actually simply going to happen is that the provision of the service will change dramatically. Specifically, people will lose access to credit, like on a very, very extensive and broad basis, especially the people who need it,” Barnum stated. He warned that this scenario could trigger “severely negative consequence for consumers and, frankly, probably also a negative consequence for the economy as a whole.” Barnum acknowledged that while such a move would also impact banks significantly, the primary concern should be the detriment to consumers and the broader financial ecosystem.
As the debate continues, the Trump administration navigates a complex financial landscape, seeking to balance consumer affordability with the stability and accessibility of the nation’s credit system.