- Key insight: An idea floated by the White House saying banks will voluntarily offer “Trump cards” with a 10% interest rate limit could dull the president’s push for a bill capping all credit card interest rates at 10%.
- Expert quote: “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.” — White House Council of Economic Advisers Director Kevin Hassett
- What’s at stake: Experts say that while the voluntary move could lower the pressure to move a bill soon, the issue is unlikely to go away in a political moment where affordability is central to most voters’ concerns.
WASHINGTON — White House economic advisor Kevin Hassett said that the Trump administration expects banks to issue “Trump cards” with rate caps at 10%, obviating the need for Congress to pass legislation that would set all credit card rates at that level.
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President Donald Trump said on social media earlier this week that he would back legislation for a 10% credit card rate cap, and then later
Hassett said on Friday morning that he didn’t actually think legislation would be necessary, and said that the administration had been talking with banks about issuing the cards.
“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 said on Fox News Friday morning.
When contacted for comment on whether Hassett’s commentary signal a retreat from Trump’s call for credit card legislation, a White House official said Friday that the president is “exploring every tool possible” to ease affordability.
Hassett’s comments are not the first time the president has used the term “Trump card” — he was part of a short-lived syndicated
“It is not going away anytime soon,” said Ed Mills, managing director of Washington Policy at Raymond James. “We have the Davos speech after that as a State of the Union. In between that there is the markup of the CLARITY Act and the Banking Committee and we have a housing bill moving. So you’re always looking at when you could get the next headline that moves stocks and right now, there’s a handful of periods of time where we need to pay attention.”
The chances for the Durbin-Marshall bill being picked up remain higher than a credit card rate fee cap, said Ian Katz, a managing partner at Capital Alpha Partners.
“Based in part on Hassett’s comments, I think the focus is on getting banks to offer some concessions — like a card product that lowers rates for certain customers — calling it a win and saying the president’s comments forced this to happen,” he said. “I thought it was interesting that Hassett said they won’t need legislation. I think that indicates that he’s managing expectations and that getting a bill capping interest rates through Congress is highly unlikely.”
Trump’s comments, and a renewed economic messaging push that focuses squarely on financial companies’ role in affordability issues that Americans experience, comes before a midterm election cycle that’s expected to be difficult for many congressional Republicans.
But that doesn’t mean bankers should rest easy thinking that the issue will drop.
“It is clearly a midterm play,” Mills said. “That doesn’t mean it goes away after the midterms.”
While markets have realized that a bill imposing a 10% rate cap is highly unlikely to pass, there’s still anticipation that something will, he said.
“When he feels that the political headwinds are against him and his party, he takes over messaging for the party,” Mills said. “I think the big thing for investors this week, though, is they recognize it’s very low probability — to near zero — that a 10% cap comes in. But [Republicans] have a history of Trump putting out a marker and then negotiating to something that seems more reasonable. He has moved the center of gravity.”