JPMorgan Chase says banks can fight back

JPMorgan Chase CFO Jeremy Barnum hinted Tuesday that the industry could resist President Donald Trump’s demand for credit card rate controls, saying “everything is on the table.”

“If you end up with weakly supported guidance that radically changes our business and is unjustified, then you have to assume that everything is on the table,” Barnum said on a call with reporters following JPMorgan’s fourth-quarter earnings report. “We owe it to shareholders.”

Barnum was responding to a question about whether banks would choose to file a lawsuit to block Trump’s order, issued late Friday, that card companies set interest rates at 10% for a year. Last year, the industry successfully resisted efforts by the Consumer Financial Protection Bureau to cap late fees for cards.

Banks and industry insiders say the interest rate cap would lead to fewer credit card accounts for Americans and a reduction in spending for the U.S. economy, as companies would simply divest accounts rather than offer them at an unprofitable level.

The national average credit card rate is 19.7% as of this month, according to a weekly survey from Bankrate.com, while rates for mortgage borrowers and store-specific cards are typically higher.

“Our belief is that actions like this would be completely counterproductive to what the administration wants for consumers,” Barnum said. “Instead of reducing the price of credit, we would simply reduce the supply of credit, and that would be bad for everyone: consumers, the broader economy, and yes, at the margin, for us.”

The CFO declined to directly answer a question about whether JPMorgan would comply with Trump’s order, which is scheduled to begin on January 20. Trump told reporters on Sunday that banks that don’t follow the directive are “violating the law.”

But there is no US law that sets a cap on card rates, although a bill was introduced last year by Senator Josh Hawley of Missouri and Senator Bernie Sanders of Vermont, which would cap the card’s annual interest rate at 10% for five years. This bill is stalled in Congress.