JPM CFO Barnum Defies Trump on Credit Card Rates: 'Shareholder Duty'
Overview
JPMorgan Chase CFO Jeremy Barnum pushed back against President Trump's call to cap credit card interest rates at 10%. Barnum stated the bank owes it to shareholders to resist directives that could harm business. The comments came after JPMorgan's shares fell over 4% following its earnings report, with the credit card rate issue pressuring the stock. The average U.S. credit card rate is nearly 20%.
JPMorgan Chase's Chief Financial Officer Jeremy Barnum publicly rebuffed President Donald Trump's directive to cap credit card interest rates at 10% for a year. Speaking on the bank's earnings call Tuesday, Barnum asserted that the financial industry must consider all options when faced with "weakly supported directives" that could fundamentally alter their business. "We owe that to shareholders," he stated, signaling a firm stance against the administration's demand.
Shareholder Duty Over Political Pressure
Barnum's remarks directly challenge President Trump's recent pronouncements, which suggested institutions failing to comply would be in "violation of the law." The average credit card interest rate in the United States hovers around 19.7%, according to data from bankrate.com, with some rates significantly higher for subprime borrowers or store-specific cards. The proposed 10% cap represents a drastic reduction, threatening profitability for lenders. Barnum warned that such a move would likely lead to a reduction in credit availability, negatively impacting consumers, the broader economy, and financial institutions.
Market Jitters and Economic Implications
The controversy comes as JPMorgan Chase saw its shares dip over 4% on Tuesday. While the bank's overall quarterly earnings surpassed expectations, a weaker-than-anticipated performance in its investment banking division contributed to the stock's decline. This slide also exerted downward pressure on the Dow Jones Industrial Average. Even before the earnings release, credit card-exposed companies, including JPMorgan, had experienced stock price pressure amid anticipation of Trump's policy stance.
Navigating Regulatory Uncertainty
The path forward for President Trump's demand remains ambiguous. Similar legislative proposals aimed at capping credit card interest rates, such as one introduced by Senators Josh Hawley and Bernie Sanders to cap rates at 10% for five years, have previously stalled in Congress. House Speaker Mike Johnson acknowledged the complexity, cautioning against unintended consequences in the pursuit of lower costs. Barnum's refusal to comment on specific compliance plans underscores the uncertainty surrounding how these directives might be implemented or enforced.
